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This is from EMC web site:
Q: Why isn’t EMC spinning off 100% of VMware?
A: VMware is one of the fastest-growing businesses in the history of the software industry. EMC and VMware believe that the partial IPO of VMware will provide both companies with advantages including better exposing the value of VMware to EMC shareholders, strengthening VMware’s ability to attract and retain talent in a highly competitive marketplace and reinforcing EMC’s commitment to VMware’s open platform strategy.
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blacktuna
Oct 22 2007 at 12:17 ET
Sounds like a load of bull to me... I understand that they want employees to see some upside in their stock options but: 1. this shows what EMC think of their own stock's price future. 2. VMW is still limited from naturally competing in it's market, cuz it belongs to big daddy. The whole thing sounds pretty fishy to me..
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shlomi
Oct 22 2007 at 12:20 ET
my philosophy is that make hay while the sun shines, i know VMW is not worth 40bln, but since people everywhere think so, i will try to cash on it for a while. but from my calculation, if we do not go into recession VMW can make upto 1.5bln in 2008 (this is on higher side, but given that their product is pretty good and another use is Virtual Desktop environment (thin clients) they may easily reach earning of 1bln/year, but even this is not enough to justify their current market cap.
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blacktuna
Oct 23 2007 at 4:49 ET
I respect your analysis but personally believe in VALUE investing.. If the market predicts a certain revenue.. then it's calculated into the stock price... if they come up a bit short on their next quarterly report they could slide huge!