Tue, Aug 14, 2007 - Page 11 News List

VMware's share offering aims for pot of US$1.1bn

TECH IPO EMC Corp, the firm's majority shareholder, is trying to capitalize on expanding demand for shares in technology firms as investors turn to good management


EMC Corp's VMware software business plans to raise as much as US$1.1 billion today in what may be the largest technology offering since Google Inc in 2004, signaling demand remains robust for computer-related companies.

Last week, VMware boosted the high end of its price range by 16 percent. The Palo Alto, California-based maker of programs to manage server computers plans to sell shares for US$27 to US$29 each, up from the US$23 to US$25 planned last month.

So far this year, 29 technology companies have raised US$3.79 billion on US stock markets, compared with the US$2.3 billion from 22 IPOs for all of last year, according to Bloomberg data.


Interest in initial public offerings is holding steady as investors seek software developers and Internet companies with expanding sales and profit.

"Given the current flight to quality, investors are migrating to higher-quality IPOs usually defined by strong growth and the quality of management teams," said Alex Lehmann, managing director of technology, media and telecom equity capital markets at Jefferies Group Inc in New York.

The appetite for technology contrasts with broader declines in equities. The Dow Jones Industrial Average has fallen 5.4 percent since reaching a record on July 19, and shares worldwide have tumbled on concern that defaults in US subprime mortgages and a credit crunch may trim economic growth and earnings.

Initial share sales have remained relatively stable. Of the 15 offerings priced in the past two weeks, two sold below the expected price range.

Three of the deals have been postponed or withdrawn, however, according to data compiled by Bloomberg.


Money managers are also on the lookout for new technology companies after US$400 billion in mergers and acquisitions since the beginning of last year, Lehmann said.

EMC, the world's largest maker of data-storage computers and software, bought VMware in 2004 for US$635 million.

In February, the Hopkinton, Massachusetts-based EMC announced plans to sell about 10 percent of VMware as newly issued shares in an IPO.

EMC will remain VMware's majority shareholder.

VMware makes programs that let server computers run several operating systems at the same time.

One machine, for example, may be able to run Microsoft Corp's Windows and the Linux operating system, allowing it to do the work of many "virtual" machines.

Shares of EMC fell US$0.02 to US$17.72 in New York Stock Exchange composite trading on Friday. They have gained 34 percent this year.

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