John Paczkowski

Recent Posts by John Paczkowski

Polish Up Those S-1 Filings, Folks. The Tech IPO Window’s Wide Open …

money-stack.jpgLooking over the trajectory of VMware’s IPO yesterday, you’d think we were still living in the go-go days of the late ’90s. Shares of the virtualization software-maker spiked nearly 76% in their first day of trading, defying the overall market slide and eclipsing Google’s historic 18% first-day gain in 2004. VMware’s shares ended the day at $51, or $22 higher than their offering price of $29. Today the company is worth some $19.1 billion, which makes it Silicon Valley’s third-largest software venture after Oracle and Adobe.

Little wonder the underwriters of VMware’s IPO exercised their overallotment option to purchase an additional 4,950,000 of the company’s shares.

The company’s performance yesterday “tells you that even in a market where stocks are selling off and investors have a negative view, that VMware stands out as a stock to own,” said Jefferies & Co. analyst Katherine Egbert. “The company is on a trajectory that mirrors Microsoft, Oracle and Veritas in the early days.”

Sure. But for how long? After all, VMWare may be best in breed, but it’s best in breed with limited competition. “Basically, for the last five to six years, VMware has had no competition,” Tom Bittman, a vice president and chief of research at Gartner, told eWeek. “The first real competition came when you had vendors developing Xen, open-source products, and then you are going to have Microsoft’s Viridian in beta later this year. I think Microsoft’s product is going to be a serious competitor to VMware, and Microsoft has also really improved its management technology.”