VMWare IPO : Analysis

VMWare is coming out public on Aug 13, 2007. It is a spin out from EMC, but EMC still have control over the company through equity.

Symbol: VMW
Price expected: $29/share
Amount to raise: $957M
Share Outstanding: 365M (detail below)
326.5 M (EMC Owned, 26.5M Class A, 300M Class B) i.e. 87%
4.x M : Sale to broker for option
4.xM : Owner by INTC (2.5%), CSCO (1.6%)
33 M : Going to Public for $29/Share

1. Raising almost 1B, they will use to payoff the debt of 350M, rest for general operation.
2. They are growing at the rate of 100%, as per last qtr
3. The market cap of the company will be 10.xB at the price of $29
4. They are buying building from EMC which is located in Palo Alto, for around 150M
5. They do not own any other building, all are leased or subleased.
6. They were baught out by EMC in 2004 for $650M (now worth 10B, wow)
7. FY2006, they earn 87M or 26c/share, with the revenue of approx 705M
8. Last qtr they earned 34M (last qtr: 15M), with the revenue of 297M, 98% more than last year same qtr

My Estimate: The expected earning for FY2007 is $0.50-0.70 on the revenue of 1.2-1.3B. With the lower end expectation and offering price ($29), the stock is IPO at 60PE. IMO, VMW worth $50 based FY08 earning expectation.

Disclaimer: This is just my analysis. It do not represent the opinions on whether to buy, sell or hold shares of a particular stock. Please buy/sell/hold on your own risk. I am not responsible for any loss you may have, please contact your financial advisor for investment risk of IPO stock. All investors are advised to conduct their own independent research into individual stocks before making a purchase decision. I do not have any relation with the company or employee of the compnay. This finding is based on the news I read and S-1 filing registration statement.