Comments on: EMC has Ph.Ds? - Part II http://storagemojo.com/2007/05/14/emc-has-phds-part-ii/ Data storage info & analysis Fri, 21 Nov 2008 22:56:21 +0000 http://wordpress.org/?v=2.6.3 By: dr b http://storagemojo.com/2007/05/14/emc-has-phds-part-ii/#comment-139581 dr b Wed, 31 Oct 2007 18:06:49 +0000 http://storagemojo.com/?p=458#comment-139581 VMWare .... market cap .... can you say billions? VMWare …. market cap …. can you say billions?

]]> By: Harold http://storagemojo.com/2007/05/14/emc-has-phds-part-ii/#comment-66590 Harold Thu, 17 May 2007 13:19:32 +0000 http://storagemojo.com/?p=458#comment-66590 A. Professor: And none of your students have lingering debts from the undergraduate degree that was a ticket into your program? If my parents had been poor, I would have entered grad school *substantially* in the red (instead, neither funded me, so no debt and no degree :-). But thanks for reporting confirmation of "John Doe's" hypothesis. A. Professor: And none of your students have lingering debts from the undergraduate degree that was a ticket into your program? If my parents had been poor, I would have entered grad school *substantially* in the red (instead, neither funded me, so no debt and no degree :-).

But thanks for reporting confirmation of “John Doe’s” hypothesis.

]]> By: A. Professor http://storagemojo.com/2007/05/14/emc-has-phds-part-ii/#comment-66373 A. Professor Wed, 16 May 2007 17:47:05 +0000 http://storagemojo.com/?p=458#comment-66373 A VMware recruiter called me recently, looking to hire my doctoral students. She was explicit in pitching the advantage of signing on now for the pre-IPO stock options. She went on to explain that my students could pay off their loans with their profits. (I politely informed her that my students' tuition and a generous stipend is paid out of my grants, so they have no loans to pay off. This concept seemed alien to her, almost unAmerican. Nonetheless ...) I passed her contact info to my graduating students. One of then spoke with VMware and reported receiving the same pitch. A VMware recruiter called me recently, looking to hire my doctoral students. She was explicit in pitching the advantage of signing on now for the pre-IPO stock options. She went on to explain that my students could pay off their loans with their profits.

(I politely informed her that my students’ tuition and a generous stipend is paid out of my grants, so they have no loans to pay off. This concept seemed alien to her, almost unAmerican. Nonetheless …)

I passed her contact info to my graduating students. One of then spoke with VMware and reported receiving the same pitch.

]]> By: John Doe http://storagemojo.com/2007/05/14/emc-has-phds-part-ii/#comment-66058 John Doe Tue, 15 May 2007 16:11:44 +0000 http://storagemojo.com/?p=458#comment-66058 I think one of the core reasons EMC is spinning out VMware besides unlocking shareholder value is to attract engineering talnet. VMware has not been able to attract any decent engineers in a long time because it's locked into EMC, there're no valuable stock options with upside, being EMC shares, and there are far better alternatives for jobs in the valley. By spinning it out, it gives VMware an independnet image and they will be able to offer stock options to lure in some badly needed talent. I think one of the core reasons EMC is spinning out VMware besides unlocking shareholder value is to attract engineering talnet. VMware has not been able to attract any decent engineers in a long time because it’s locked into EMC, there’re no valuable stock options with upside, being EMC shares, and there are far better alternatives for jobs in the valley. By spinning it out, it gives VMware an independnet image and they will be able to offer stock options to lure in some badly needed talent.

]]> By: Ewan http://storagemojo.com/2007/05/14/emc-has-phds-part-ii/#comment-65973 Ewan Tue, 15 May 2007 08:18:11 +0000 http://storagemojo.com/?p=458#comment-65973 I think EMC knows it's far too early to spin-off VMware, which is why they're only releasing 10% of the shares. If they believe the growth over the last couple of years will continue, then in another 4 or 5 years then VMware could be worth the $7Billion mentioned above, and then EMC can sell off the rest of the shares for a tidy sum. Right now it feels like a marketing event, a bit of publicity for EMC and VMware without any real changes being made, and a chance for the founders of VMware to sell off some stock if they feel like it. I think EMC knows it’s far too early to spin-off VMware, which is why they’re only releasing 10% of the shares. If they believe the growth over the last couple of years will continue, then in another 4 or 5 years then VMware could be worth the $7Billion mentioned above, and then EMC can sell off the rest of the shares for a tidy sum.

Right now it feels like a marketing event, a bit of publicity for EMC and VMware without any real changes being made, and a chance for the founders of VMware to sell off some stock if they feel like it.

]]> By: Robin Harris http://storagemojo.com/2007/05/14/emc-has-phds-part-ii/#comment-65940 Robin Harris Tue, 15 May 2007 05:45:17 +0000 http://storagemojo.com/?p=458#comment-65940 Anil, Perhaps my Wharton Mojo has left me for good. But what I've read says EMC is hoping raise $100 million by selling 10% of VMware. <blockquote> PALO ALTO, Calif., and HOPKINTON, Mass.-Wednesday, February 7, 2007 EMC Corporation (NYSE:EMC), the world leader in information infrastructure solutions, today announced its intention to sell approximately 10% of VMware via an initial public offering (IPO) of newly issued VMware stock. </blockquote> In the S-1 registration, the Wall Street Journal reported: "The $100 million valuation for the IPO was estimated solely for calculating the registration fee, the filing said. Often, the eventual price terms of an IPO offer differ substantially from the valuation in the first registration." Anil, you may be correct. I'm sure EMC is hoping you are. As I've noted before, I believe the virtualization represented by VMware solves the wrong problem. But I don't write the checks. As <a href="http://software.seekingalpha.com/article/34100" target="_blank" rel="nofollow">SeekingAlpha</a> says: <blockquote> EMC/VMware Spin-Out: New Shareholders Get Virtually Nothing </blockquote> If EMC can get investors to value nothing at $7B, I tip my hat to them. This is capitalism at its most feral. Robin Anil,

Perhaps my Wharton Mojo has left me for good. But what I’ve read says EMC is hoping raise $100 million by selling 10% of VMware.

PALO ALTO, Calif., and HOPKINTON, Mass.-Wednesday, February 7, 2007

EMC Corporation (NYSE:EMC), the world leader in information infrastructure solutions, today announced its intention to sell approximately 10% of VMware via an initial public offering (IPO) of newly issued VMware stock.

In the S-1 registration, the Wall Street Journal reported: “The $100 million valuation for the IPO was estimated solely for calculating the registration fee, the filing said. Often, the eventual price terms of an IPO offer differ substantially from the valuation in the first registration.”

Anil, you may be correct. I’m sure EMC is hoping you are. As I’ve noted before, I believe the virtualization represented by VMware solves the wrong problem. But I don’t write the checks.

As SeekingAlpha says:

EMC/VMware Spin-Out: New Shareholders Get Virtually Nothing

If EMC can get investors to value nothing at $7B, I tip my hat to them. This is capitalism at its most feral.

Robin

]]> By: Anil Gupta http://storagemojo.com/2007/05/14/emc-has-phds-part-ii/#comment-65919 Anil Gupta Tue, 15 May 2007 04:44:05 +0000 http://storagemojo.com/?p=458#comment-65919 Robin, There is a disconnect in your VMware valuation and Isilon market cap. Isilon 2006 revenue ~60m Isilon market cap ~$800m [ ~10x revenue] VMware 2006 revenue ~700m VMware market cap ~7B estimated based on 10x revenue. Numbers rounded for easy math. IMO, VMware was a great deal for EMC both times, at purchase and at spin-off, a stroke of genius by EMC. Buying just before VMware went in to hyper-growth, spinning off just before incoming high competitive pressure and plateau in growth in next few years, potentially. Anil Robin,

There is a disconnect in your VMware valuation and Isilon market cap.

Isilon 2006 revenue ~60m
Isilon market cap ~$800m [ ~10x revenue]

VMware 2006 revenue ~700m
VMware market cap ~7B estimated based on 10x revenue.

Numbers rounded for easy math.

IMO, VMware was a great deal for EMC both times, at purchase and at spin-off, a stroke of genius by EMC. Buying just before VMware went in to hyper-growth, spinning off just before incoming high competitive pressure and plateau in growth in next few years, potentially.

Anil

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