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I don't think this sales miss necessarily means VMW's business is headed for a death spiral. I do think it illustrates just how important valuation is.

A study was done on the "Nifty 50" and their subsequent performance from 1973 over the next 30 years. There was an inverse relation between PE ratios and future stock price performance. Those that had the highest PE ratio performed worse over the next 30 years than those with the lowest PE ratios. VMWare was priced for perfection and this is the risk with buying extremely high priced stocks.
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