EMC to spin off part of VMware in IPO

Three years after being bought by EMC Corp., VMware is going public.

EMC announced plans Wednesday to offer 10 percent of its virtualization software subsidiary in an initial public offering (IPO).

The offering, which is expected to occur by September, will "unlock more of VMware's value for EMC shareholders," and help the company "retain and attract the software industry's top talent," EMC Chairman, President, and CEO Joe Tucci said in a statement.

Analysts have recently speculated on whether EMC would spin off VMware, said Gordon Haff, principal IT advisor with research firm Illuminata Inc.

"EMC wants to get some of the money while VMware is clearly a hot property," he said. "On the other hand, they clearly want to retain a very large chunk of VMware."

EMC's stock (EMC) has been stuck in the US$10 to $15 range for the last three years.

Tucci's comments about unlocking VMware's value "might be less politely phrased as 'hopefully getting the shareholders off my butt,'" Haff said.

VMware is an early leader in one of the IT industry's hottest market segments. The company's revenue was up 83 percent in 2006, totalling $709 million, EMC said.

Join the Network World communities on Facebook and LinkedIn to comment on topics that are top of mind.

Copyright © 2007 IDG Communications, Inc.