No date has been given for the IPO, and VMware is still deciding whether it will float on the Nasdaq or New York Stock Exchange, but the filed prospectus makes it clear that EMC will be keeping a tight rein over VMware even after it goes public.
Following the offering EMC will own 32.5 million Class A shares, and 300 million Class B shares. While roughly 3 million Class A shares will be publicly traded, they will only carry one vote per share, compared to 10 votes for each of the Class B shares.
VMware said it plans to use the proceeds of the IPO to repay a portion of the $800m inter-company loan it owes its parent, to purchase its new headquarters from EMC, and for working capital to finance growth.
EMC bought privately held VMware January 2004 for $635m in cash. Since then, sales VMware’s x86 virtualization software have shown consistent breakneck growth. For 2006, VMware revenue totaled $703.9m, up 82% year-on-year from $387.1 in 2005, which was up 77% on the previous year.
Financial figures reveal that VMware has been profitable since the financial period ending January 2004 and made a net income of $86.9m in 2006. It also has cash and equivalents of $176.1m in the bank.
EMC is prepared to spin off a portion of its shares in VMware in order to unlock its value for shareholders and put some perspective on the company’s share price and capitalization. EMC intends to pass on the return from the sale to its shareholders via a dividend or a share buy-back.
