Last week, EMC announced its intention to sell approximately 10 percent of VMware through an initial public offering (IPO) of newly issued VMware stock. EMC will retain ownership of the remaining shares of VMware and has no intention of spinning out or otherwise divesting this ownership interest. Joe Tucci, EMC chairman, president and CEO, said, “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.”
VMware had record sales in 2006, growing revenues 83 percent during the year to $709 million. It finished the fourth quarter of 2006 with year-over-year revenue growth of 101 percent, delivering accelerating year-over-year growth for the fifth consecutive quarter.
Diane Greene, VMware president and EMC executive vice president, said, “We expects that the IPO will help us execute on our vision of an industry-standard virtual infrastructure. It should enable us to accelerate our ability to find and attract great people, continue to invest in great product development, and grow an even stronger partner ecosystem.”
EMC believes the IPO, which is expected to occur this summer, will provide both EMC and VMware with a number of significant advantages including improved visibility into VMware’s performance and growth relative to the market, strengthened VMware employee retention and recruitment through a broad-based equity award pool, and reinforced commitment to VMware’s open platform strategy.
The IPO isn't expected to have a material impact on EMC’s 2007 business outlook. VMware will be a publicly traded entity upon completion of the transaction. Tucci and Greene are expected to be named to VMware’s Board of Directors.