VMware files prospectus for IPO

New details emerged Thursday of virtualization software provider VMware Inc.'s plans to sell its stock to the public.

VMware, a subsidiary of storage vendor EMC Corp., filed details of its plans to sell 10% of its stock with the U.S. Securities and Exchange Commission.

According to the SEC filing, VMware will have two classes of stock. There will be 32.5 million shares of Class A stock, which will be held by EMC. Approximately 300 million Class B shares will be sold to the public. Holders of Class B stock will have 10 votes for each share while Class A holders will have one vote per share.

Although the prospectus, called an S-1 filing, states that the initial public offering is expected to raise $100 million, EMC spokesman Michael Gallant cautioned that figure is just a "placeholder" number and could change. The filing also does not identify a per-share price at which VMware stock will be sold when the company goes public, which is expected to happen sometime at midyear.

When it announced the IPO on Feb. 7, EMC said that the funds would go to stock-based compensation for employees and to help EMC shareholders derive more value out of VMware's success.

The offering will "unlock more of VMware's value for EMC shareholders" and help the company "retain and attract the software industry's top talent," EMC Chairman, President and CEO Joe Tucci said at the time.

In releasing its first-quarter 2007 financial results on April 17, EMC noted that VMware offerings represented its fastest-growing product line, with sales up by 95%, to $256 million, compared with $131 million in the same quarter of 2006.

VMware was founded in 1998 and was acquired by EMC in 2004 for $635 million.

Virtualization software increases the utilization of servers by allowing multiple versions of software or operating systems to run simultaneously on the same server hardware.

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