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VMware IPO
- Thread starter MrDODGE
- Start date
Last year, VMware reported $704 million in revenue, operating income of $121 million and net income of $87 million, equivalent to 26 cents a share. Back in 2005, VMWare had $387 million of revenue, $94 million of operating income and net income of $67 million or 20 cents a share. So revenue was up 82%, operating income 29% and net income 30%. Looking at expenses, several line items grew even faster than the rapid rise in revenue, including R&D (up 104%), sales and marketing (up 91%), G&A (up 126%) and costs of servicing revenue (up 158%).
Thank you Mr. Dodge for this great research. I have 2 reservations with this IPO.
1) Why didn't they get a heavy hitter Investment Bank like Goldman or Morgan Stanley to lead this offering?
2) Why did they have to sell to Cisco and Intel before the IPO. Is there not enough demand?
That being said, Virtualization is the hottest thing going in the Enterprise IT space. They own 90% of the market. I'll wait to see if they up price the offering.
1) Why didn't they get a heavy hitter Investment Bank like Goldman or Morgan Stanley to lead this offering?
2) Why did they have to sell to Cisco and Intel before the IPO. Is there not enough demand?
That being said, Virtualization is the hottest thing going in the Enterprise IT space. They own 90% of the market. I'll wait to see if they up price the offering.
IPO Date: 08/13
Lead Underwriter: Citi
http://www.ipohome.com/common/ipoprofile.asp?ticker=VMW
Also, if you are buying EMC to get shares of VMware. I don't believe they are granting VMware stock to EMC shareholders. You may want to check.
Lead Underwriter: Citi
http://www.ipohome.com/common/ipoprofile.asp?ticker=VMW
Also, if you are buying EMC to get shares of VMware. I don't believe they are granting VMware stock to EMC shareholders. You may want to check.
Quote from sophiekay:
Thank you Mr. Dodge for this great research. I have 2 reservations with this IPO.
1) Why didn't they get a heavy hitter Investment Bank like Goldman or Morgan Stanley to lead this offering?
2) Why did they have to sell to Cisco and Intel before the IPO. Is there not enough demand?
That being said, Virtualization is the hottest thing going in the Enterprise IT space. They own 90% of the market. I'll wait to see if they up price the offering.
Cisco and Intel wanted to get in, the demand is VERY high!
Quote from sophiekay:
Thank you Mr. Dodge for this great research. I have 2 reservations with this IPO.
1) Why didn't they get a heavy hitter Investment Bank like Goldman or Morgan Stanley to lead this offering?
2) Why did they have to sell to Cisco and Intel before the IPO. Is there not enough demand?
That being said, Virtualization is the hottest thing going in the Enterprise IT space. They own 90% of the market. I'll wait to see if they up price the offering.
Quote from PARACLESE:
two solid questions from sophie. Dont you sound like the new issue heavy hitter? I must agree with you. I dont like citi deals, at least lehman is there. Something seems fishy about this. I smell a bear raid on the horizon to snap these shares up at rock bottom prices. bad for emc shareholders. IMO. If someone did want this company csco or whoever they would have taken it without it going to market. For multiple companies to buy stakes pre ipo sounds odd. to me at least.
This IPO is VERY hot. I pulled some strings and got nada, I'm usually good and getting an IPO or two.
I bought EMC because the books are going to look mighty rosey with 80% of VMware still with them, the issue will soar first day- there is a slight
" green " angle to them as well. My sources have said that the whole affair is " wildly overpriced " but I don't agree.
Strategy Buy EMC for the long haul and wiggle into the IPO after a day or two. ~ stoney
PS The clock has finally started on the VMware (VMW) IPO. According to reports Monday, EMC (EMC) will partially spinoff its VMware division as a public company on August 14th.
It will be 33-million shares priced $23 to $25, which is lower than I would have expected -- and likely to be adjusted higher as the book fills.
I'm guessing VMware will come public with around a $10-billion market cap, which, among other things, is another $9-billion to EMC given its 90% holding.
Underwriters are Citi, J.P. Morgan, Lehman, Credit Suisse, and Merrill.
PPS- The Dangers- The small number of shares being offered to the public, only 10%. The offering will be over-subscribed and the individual investor will only be getting access to shares after the big pop that can be expected when the big underwriters and funds finally begin to sell on the open market.
2. Revenues have been increasing rapidly but expenses are increasing as fast as revenues. Will this eventually hold the stock back when it becomes publicly traded?
3. The competitive landscape is becoming more complicated. VMware pretty much had the field to itself but there are now a couple of initiatives that are having an impact. There are open-source solutions beginning to emerge for the Linux world. More ominously, Microsoft has developed a virtualization solution that they will be bundling with their Windows server software. That essentially means that buyers will receive it (almost) free as part of their basic operating system purchase. There will be some companies that will take the Microsoft product as the path of least resistance and not even consider VMware.
I bought EMC because the books are going to look mighty rosey with 80% of VMware still with them, the issue will soar first day- there is a slight
" green " angle to them as well. My sources have said that the whole affair is " wildly overpriced " but I don't agree.
Strategy Buy EMC for the long haul and wiggle into the IPO after a day or two. ~ stoney
PS The clock has finally started on the VMware (VMW) IPO. According to reports Monday, EMC (EMC) will partially spinoff its VMware division as a public company on August 14th.
It will be 33-million shares priced $23 to $25, which is lower than I would have expected -- and likely to be adjusted higher as the book fills.
I'm guessing VMware will come public with around a $10-billion market cap, which, among other things, is another $9-billion to EMC given its 90% holding.
Underwriters are Citi, J.P. Morgan, Lehman, Credit Suisse, and Merrill.
PPS- The Dangers- The small number of shares being offered to the public, only 10%. The offering will be over-subscribed and the individual investor will only be getting access to shares after the big pop that can be expected when the big underwriters and funds finally begin to sell on the open market.
2. Revenues have been increasing rapidly but expenses are increasing as fast as revenues. Will this eventually hold the stock back when it becomes publicly traded?
3. The competitive landscape is becoming more complicated. VMware pretty much had the field to itself but there are now a couple of initiatives that are having an impact. There are open-source solutions beginning to emerge for the Linux world. More ominously, Microsoft has developed a virtualization solution that they will be bundling with their Windows server software. That essentially means that buyers will receive it (almost) free as part of their basic operating system purchase. There will be some companies that will take the Microsoft product as the path of least resistance and not even consider VMware.