From Staff Reports
At a time when the U.S. stock market is at its volatile worst, the initial public offering of a high-tech company is looking better all the time. The VMware computer-virtualization unit of data-storage giant EMC Corp. (NYSE: EMC) has just boosted the size of its initial public offering to as much as $1.1 billion, making it potentially the biggest IPO of a high-tech firm since Google Inc. (Nasdaq: GOOG) went public in 2004.
Google, owner of the No. 1 Internet search engine, raised $1.92 billion in its August 2004 IPO. This year, The Blackstone Group LP (NYSE: BX) has been the biggest public offering, followed by MF Global Ltd. (NYSE: MF) and MetroPCS Communications Inc.(NYSE: PCS).
The Palo Alto, Calif.-based VMware, whose software is used to run server computers, will sell 33 million shares for $27 to $29 each, according to a regulatory filing made yesterday (Thursday). That’s actually a substantial increase just from July, when the company predicted those shares would sell for $23 to $25 each.
If all shares are sold at the top price, VMware may rank as the fourth largest U.S. offering this year, according to data compiled by Bloomberg News. The firm’s software allows the powerful server computers that act as the brains and traffic cops of high-speed computer networks to run several different computer-software operating systems – including the Windows Vista system marketed by Microsoft Corp. (Nasdaq: MSFT).
EMC is the world’s No. 1 maker of data-storage hardware and software and was one of the great growth-stock stories of the 1990s. It bought VMware in 2004 for $635 million, and in February decided to sell about 10 percent of the unit. Other key tech-industry players apparently feel that VMware has valuable technology: Last month, chip-giant Intel Corp. (Nasdaq: INTC) said that it’s Intel Capital venture-financing unit would spend $218.5 million for a post-IPO stake of 2.5% of VMware's outstanding shares. Cisco Systems Inc. (Nasdaq: CSCO), the biggest maker of computer-networking equipment, said it will buy $150 million of shares for a 1.6% stake.
In its registration statement, VMware said that its net income for the quarter ended June 30 were $34.2 million, more than double the profits of $15.2 million recorded for the same quarter a year earlier. Revenue soared 90% to nearly $297 million.
VMware plans to list its shares on the New York Stock Exchange under the symbol 'VMW.'