Barron's: Don't Expect VMware to Rebound

Barron's released an article on Saturday detailing their belief that VMware

will slide in 2013. The article details several reasons why the firm could struggle. These include the following: Forecasted revenue is below expectations for both this quarter and 2013 as a whole Slowing revenue growth Slowing profit growth Potential for market saturation Declining demand for VMware's “hypervisor” - it's core product

Barron's is dead on with the relationship between VMware's guidance and stock price. The Palo Alto, California software firm expects first quarter revenue to finish in the $1.17 to $1.19 billion range. However, Wall Street was looking for $1.25 billion,

. With the weak guidance, VMware has taken a beating in the market. Since the January 28 earnings release, the stock has fallen 21 percent. This leaves the company with a significant hill to climb, given that it was at nearly $100 two weeks ago. With a pattern of slowing profit and revenue growth along with declining demand for its go-to product, it will be difficult for the firm to rebound well anytime soon.

, on January 28, MKM Partners downgraded VMware from Buy to Neutral. On the same day, Wunderlich downgraded the company from Buy to Hold, as notes Yahoo Finance. Of course, these happened before the latest Barron's article. However, with two ratings dings immediately following the earnings release, it appears analyst opinion favors Barron's stance on VMware.

Barron's remains a heavily-read publication, particularly among the elderly crowd.

, the publication's reader base is quite devoted and wealthy. The average reader has been on board eight years and his or her household has $2,736,000 worth of securities. Most importantly, according to Barron's, 96 percent of its readers have taken action after reading the publication. Put this all together and the picture is clear. Barron's has the power to move markets, and its latest story on VMware could very well end up as a self-fulfilling prophecy.

In the aftermath of the weak revenue forecast, VMware dropped sharply and bottomed out below $76. Then, from the beginning of last week on, the stock gradually rose to above $79. However, VMware is back on the downslide on Monday. And, there doesn't appear to be any news driving the decline. In other words, Barron's conclusion that VMware will not rebound may have increased the likelihood of such an eventuality. VMware is down around 1.5 percent on Monday.