By Victor Karamalis
For those of you that have been caught up in the credit crunch crisis with the credit derivatives market of the past week and hurricane woes in the Pacific and Gulf of Mexico, VMware went IPO on Tuesday. VMware, (NYSE:VMW) is a software company that primarily deals with server virtualization. This squeezes more productivity out of servers by way of networking virtual machines, storage, and CPU utilization.
EMC, the world’s largest maker of data-storage computers and software, bought VMware in 2004 for $635 million. It decided to sell about 10 percent which is presently 33 million shares for an initial $23 to $29 a share. It came out at a whopping $50 a share and finished at just over $61 for the high this week.
VMware is based in Palo Alto and has more than 20,000 organizations as customers. Virtual servers are here to stay because they make business sense not only in terms of productivity, but also in terms of saving money in terms of electrical costs by way of electricity and air-conditioning server rooms, labor costs, and real estate costs that would otherwise be spent on more servers and racks. Even more so, for those of you that need a better understanding of why this is important, Web 2.0 interactions drive up a lot of network usage and you need servers to handle the traffic. In addition, as more people use Web 2.0 applications and online communities, the ability to manage this is being done with server virtualization.
Clearly there are other competitors in this space such as Microsoft and SWSoft but what this IPO really did was put a spotlight on Tech for the rest of the business world. Doing the math, the IPO raised $1.1 billion which is the largest IPO of a technology company since Google’s IPO back in 2004. Considering the amount of trouble that financial institutions such as Bear-Stearns and CountryWide have had in the past few weeks, it shows investors that Technology companies are less volatile and more certain than the instrument leveraged companies mentioned prior. This is a clear indication that technology companies including some startups may be less risky as investments. This IPO also goes to show that technology is also a fundamental pillar in today’s society that should be embraced and vested.
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