John Paczkowski

Recent Posts by John Paczkowski

VMware Announces IPO Wealth-Virtualization Software

images.jpgIt requires a certain audacity to boost the price range of your initial public offering amid nauseating market volatility. But that likely comes easily when investors are already referring to you as “the next Google.”

And so, when EMC-owned virtualization outfit VMware lists the 33 million shares it plans to sell on the New York Stock Exchange tomorrow, it will price them between $27 to $29–$4 higher than it projected in July. The sale will raise as much as $1.1 billion, making VMware’s IPO one of the largest tech offerings since Google’s three years ago.

“IPO investors are in for a treat this week,” Renaissance Capital said in a research note to clients today. The company could be “one of the most anticipated tech offerings since Google’s debut nearly three years ago. Given VMware’s dominant position, compelling growth prospects and a proposed valuation with lots of room for upside, VMware’s IPO is bound to make a big splash in its debut.”

Indeed. Sanford C. Bernstein & Co.’s technology analysts estimate VMware controls about 85% of the market share for virtualization. And its revenues grew 82% in 2006 from a year earlier to $704 million. Which explains why investors are so eager for a piece of it–turbulent financial markets be damned. “It certainly does indicate it’s a hot issue,” Jay Ritter, a professor of finance at the University of Florida, told the San Jose Mercury News. “The buzz on Wall Street is … it will jump at least 20%” during its first day on the market.

UPDATE: Looks like the buzz on Wall Street was right. In early trading this morning VMware stock rose to as high as $55 a share before settling down to just over $50 – 72 percent higher than its starting price of $29.