EMC's VMWare IPO: New Preliminary Data
Forstarters the company cannot say or predict when their IPO of the VMWareunit will come. But some inferences can be made regarding this. The amended filing is not a big deal but they are still waitingto hear back from the SEC for all conditions to be met on employeestock options (implied at at $23) and other issues. EMC posts earningson the morning of July 24, 2007, and it is probably a safe bet that youwon’t see the IPO before then. The company still wants the IPO in thesummer rather than later. If I was a making odds on timing, I would start theodds in the second week of August. That of course is subject to thewhim of the stock market and subject to SEC filings and amendments, andthat could easily change. Its VMworld 2007 conference is September11-13 in San Francisco, and it would seem quite obvious that thecompany wants this IPO wrapped up by then.
VMware’s virtualization technology allows for multiple operatingsystems to run side-by-side on a single machine. This helps customerssave on and use hardware more efficiently without the need for morethan one PC. VMware posted net income of $87 million on revenue of$704 million in 2006 (up 82% from $387.1 million in 2005). Q1 2007revenues were $258.695 million versus $129.077 million in Q1 2006, andservices were a larger percentage of total revenues compared to licenserevenues. The company claims 20,000+ customers and has 100% of Fortune100 companies and 84% of the Fortune 1000 companies. Partnerships arelisted as the following: 200+ leading hardware, software, network andstorage companies; 4000+ resellers, distributors, and systemsintegrators. We had also noted back at the end of February how VMWare was successfully taking on Microsoft (MSFT-NASDAQ) as a competitor.
We’ll be sending out expectations on EMC and VMWare tosubscribers of the 24/7 Wall St. Special Situation Investing Newsletter (Trial sign-up) and some historical data comparing this to other suchscenarios regarding other IPO’s that are of hot units out of keytechnology companies.
Jon C. Ogg
June 27, 2007
Jon Ogg can be reached at email@example.com; he does not own securities in the companies he covers.