Question marks have been raised over the ability of VMware to meet its fourth quarter revenue numbers, after a turbulent 12 months for the virtualisation giant that saw the ousting of its co-founders, and a massive decline in its share price.

Despite a string of healthy trading figures, Wall Street seems to have fallen out of love with the virtualisation vendor. Other investors are becoming openly cautious about VMware, a point highlighted in a blog by Zachary Scheidt, a managing general partner for a private hedge fund.

Scheidt pointed out that last month Morgan Stanley issued a "sell" recommendation on VMware's shares. UBS followed suit and also rated the virtualisation software vendor as a sell.

"On November 4th we initiated an RTI (Research Tactical Idea) for a trading sell on VMW, and now see further risk near term," said Morgan Stanley in its latest research note on VMware. "First, Q4 is off to a slow start and we believe VMW may struggle to hit consensus. Second, ELA (VMware's Enterprise Licence Agreement) momentum is slowing, which likely removes a major driver of license growth. Third, headcount will weigh on margins in the first half of 09."

"Now, I don't always put too much credence in recommendations from brokerages, but since sell ratings are so rare, I thought it worth a look," said Scheidt on his blog. "Upon further review, there were some very interesting red flags raised that indicate caution is still important with this name," he wrote.

Scheidt highlighted the disastrous slide of VMware's shares over the past 14 months. Shares in the company are currently trading at the $24.50 (£16) mark, a far cry from the heady heights of $122 (£82) reached in November 2007.

Scheidt also picked up on Morgan Stanley's concern that VMware will have a difficult time meeting its fourth quarter revenue numbers. This is because as early as November, the "channel checks" that analysts undertake have suggested weakness in the sector.

A more detailed analysis can be found here.

"As a matter of policy, we don't comment on stock price fluctuations," said Reza Malekzadeh, EMEA Senior Director of Products and Marketing at VMware. "But what I can say is that the fundaments of the business are sound. According to a recent Goldman Sachs IT spending survey, for the past 12 quarters VMware has been gaining increasing amount of IT spend. Indeed, VMware has been the number 1 recipient for IT spend for past 12 quarters."

"We are very mature software company, but some quarters are more back end loaded than others," Malekzadeh told Techworld. "I would say that we have the same financial rhythm as other companies.

"But it is unprecedented times we are currently in, and it would be foolish of me to say it is not affecting us, like other companies," he added.

"VMware as a technology company has to maintain its leadership and has to innovate, and we have no intension of slowing innovation down," he said. "The path that typically customers start down with virtualisation is to virtual the servers in order to get a capital gain (capex), but as they move forward with deploying virtualisation, they start to achieve operational expense savings, for example it requires less administrators to run workloads etc."

Malekzadeh pointed out that we could expect to see product announcements in the following areas over 2009, namely Virtual Datacentre Operating System; Vcloud (allows customers to move their applications seamlessly between their facility and a hosting facility without closing it down); and finally the client.

"The desktop is a huge marketplace with a lot of pain points for companies (managing the systems etc), and virtualisation can bring whole new advantages to that world," he said.