EMC’s VMware division may see June IPO

Listen to this article

00:00
00:00

EMC, the world’s biggest maker of data storage and networking equipment, plans to file registration documents for the initial public offering of its VMware software subsidiary within ”days or weeks”, setting the stage for an IPO as early as June.

EMC in February announced plans to float a 10 per cent stake in VMware. The flotation expected to be one of the most sought-after technology IPOs in recent years. Analysts have said the IPO value the entire VMware business at about $10bn.

Joe Tucci, chief executive, told the Financial Times on Tuesday that EMC expected to file S1 registration documents with the Securities and Exchange Commission ”shortly”. Following a review by the SEC and a two-week roadshow, Mr Tucci said VMware shares could make their debut on public markets ”as early as late June”.

If it were a stand-alone business, VMware would rank among the world’s fastest growing software companies. It makes "virtualisation" software, which allows computers to run multiple computing processes on a single machine. EMC bought the company for $625m in 2003.

The IPO update came as EMC reported higher quarterly profits, driven by a strong sales of software licenses by VMware and RSA Security, an information security company EMC acquired last year for $2.1bn.

Shares of EMC rose 2.6 per cent to $15.15 by mid-day in New York. They had risen from a low of $9.67 in August.

EMC made a net profit of $312m in the first fiscal quarter, or 15 cents a share, up from $11 cents a share one year ago. Sales were $2.98bn, up from $2.55bn last time.

Revenues at VMware grew 95 per cent year-on-year to $256m in the first quarter, putting the software unit on track to break $1bn in annual revenues this year.

Software license and maintenance revenue grew 29 per cent in the quarter. It accounted for 40 per cent of the company’s total sales. Revenues from sales of storage systems grew 6 per cent, accounting for about 44 per cent of sales. Services revenue grew 21 per cent.

Looking ahead, EMC said it was ”firmly on track” to meet its full-year financial goals.

Mr Tucci said EMC had no plans to sell a further stake in VMware following this summer’s IPO.

”There could be some small acquisitions where we want to use the shares as currency, but we have no intention of selling more stock,” he said.

Mr Tucci said EMC had no plans for big acquisitions this year. ”Obviously, we are going to be opportunistic if an opportunity comes along and it’s in the best interests of our shareholders,” he said. ”My preference this year is to do several tuck-in acquisitions but nothing huge.”

Copyright The Financial Times Limited 2017. All rights reserved. You may share using our article tools. Please don't copy articles from FT.com and redistribute by email or post to the web.