Virtualization Technology News and Information
EMC strikes while the virtualisation iron is hot

Quoting IT-Director 

So EMC has announced that it plans to sell off 10% of VMware via an IPO. I may not be a financial analyst but this seems like a pretty smart move by Joe Tucci et al. Virtualisation is hot, as VMware's 86% revenue growth in 2006 clearly shows, and EMC sees an opportunity to exploit the rising temperature to provide shareholders with a return without relinquishing control of this revenue generating machine.

Comments from Tucci and Diane Greene (founder and President of VMware) in the press release highlight a key reason for the IPO in my opinion:

We expect the IPO to unlock more of VMware's value for EMC shareholders while also strengthening its ability to retain and attract the software industry's top talent


It should enable us to accelerate our ability to find and attract great people

In an almost invisible software IPO market, stock options in a fast-growing company such as VMware should certainly help with recruitment.

Greene expanded on the press release here, explaing how the IPO:

Further reinforces our commitment to running VMware with an open platform strategy that benefits customers and the broader IT industry. Open and equal access has been important to our partners and benefited our customers because of the full and free choice it provides.

Greatly strengthens our ability to execute on all of our promises and continue to deliver on the rich roadmap that we see for virtualization software both through our own products and through open and standards based virtual infrastructure.

Allows VMware to invest in providing you the best customer service, support and experience on a global basis

Will bring even more focus and enthusiasm and innovation to an already thriving marketplace.

I am not so sure about the first point. The fact that EMC will only control 90%(!) of the company post-IPO won't make it any more open than it is now. The IPO should certainly provide funds for investment and expose VMware to the scutiny of the public market to focus the (what already seem pretty focused to me) minds of the company's management.

Ultimately, I don't see any downside for VMware's customers. Their supplier has more money to invest and the risks inherent in an IPO should be contained by virtue of EMC's continued controlling stake.

Read or comment on the original, here.

Published Saturday, February 10, 2007 10:04 PM by David Marshall
Filed under:
There are no comments for this post.
To post a comment, you must be a registered user. Registration is free and easy! Sign up now!
<February 2007>