EMC to Keep 90 Percent of VMWare Through Next Few Years

The storage giant reaffirms its original strategy of selling off 10 percent of its prized virtualization division in 2007.

Data storage market leader EMC reaffirmed that it will not reduce its 90 percent stake in its VMWare subsidiary for at least two years after a summer initial public offering, Chief Financial Officer David Goulden said May 16.

The Hopkinton, Mass.-based company previously had said that it would offer 10 percent of VMWare to the public via an IPO late in 2007.

VMware is the global marketshare leader in software for industry-standard virtualized desktops and servers and is currently a wholly owned subsidiary of EMC.

/zimages/2/28571.gifRead more here about the growing demand for virtualization.

"Were obviously going to assess the situation down the road based on whats happening," Goulden said at the Reuters Global Technology, Media and Telecoms Summit in New York.

VMware, based in Palo Alto, Calif., had record sales in 2006, increasing revenues 83 percent during the year to $709 million. It finished the fourth quarter of 2006 with year-over-year revenue growth of 101 percent, delivering accelerated year-over-year growth for the fifth consecutive quarter.

"VMWare is a precious asset to EMC," EMC President and CEO Joe Tucci said on Feb. 7, when the company announced the IPO.

"We will retain control of VMWare, mainly for three reasons: We want to continue to unlock value for EMCs shareholders; we want to strengthen the retention of our employees at VMWare and be transparent about our relationship; and we want to reconfirm our commitment to VMwares platform-neutral approach to network infrastructure."

EMC bought VMWare in 2004 for $635 million. VMWare software enables large computers to run several operating systems at the same time, making it easier and less expensive to manage networks.

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Chris Preimesberger

Chris J. Preimesberger

Chris J. Preimesberger is Editor-in-Chief of eWEEK and responsible for all the publication's coverage. In his 15 years and more than 4,000 articles at eWEEK, he has distinguished himself in reporting...