Research in Motion (NASDAQ:RIMM) may be the beneficiary of a competitor’s downfall, as VMWare (NYSE:VMW) posted an unexpectedly low outlook for the year and investors and analysts started to turn their backs on the company.
While VMWare may not be a direct competitor with RIM, there is one market that each is vying for. One of the special features on RIM’s BlackBerry 10 platform is the dual-persona technology, which separates personal data from work data, allowing employees to carry around just one device, and allowing employers to protect sensitive corporate information on that same device.
RIM’s dual-persona feature is an important one if the company wants to capture the corporate and government mobile markets. But, RIM isn’t alone in offering dual-persona technology, and VMWare is one of the chief competitors in the space.
VMWare’s dual-persona software can run on Google’s (NASDAQ:GOOG) Android, giving it an immediate edge on RIM because it automatically has a larger pool of potential users. VMWare is also developing a version of the technology that would run on Apple’s (NASDAQ:AAPL) iPhones and iPads, and is coordinating with smartphone manufacturers to have the dual-persona feature pre-installed on some devices in the future.
Despite VMWare’s strength in dual-persona — a market which could alone be worth $1 billion in the next 5 years — and a surprisingly strong fourth-quarter report Monday, the company’s stock is down over 20 percent today after a forecast for the current quarter and year disappointed investors.
Numerous analysts across the board reduced their price targets and revenue estimates for the company. One analyst from MKM Partners cut his price target from $125 to $77. Revenue estimates for the year have dropped to between $5.28 billion and $5.32 billion.
The poor performance and lowered expectations for 2013 could reflect a weakening VMWare, and mean a more open shot at the dual-persona market for RIM. But, FBR Capital’s Daniel Ives thinks VMWare is still strong because it has tended to offer conservative guidance in the past, and it has new technological developments expected to kick up later this year. So, VMWare’s position in RIM’s path still remains uncertain.
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