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EMC to hold VMWare stake for 2 years
May 16, 2007 / 5:03 PM / in 11 years

EMC to hold VMWare stake for 2 years

NEW YORK (Reuters) - Computer data storage company EMC Corp. EMC.N does not plan to reduce its stake in its VMWare subsidiary for at least two years after an upcoming initial public offering, Chief Financial Officer David Goulden said on Wednesday.

<p>EMC Corp. Executive Vice President and Chief Financial Officer David Goulden speaks during the Reuters Global Technology, Media and Telecoms Summit in New York, May 16, 2007. REUTERS/Keith Bedford (UNITED STATES)</p>

“We’re obviously going to assess the situation down the road based on what’s happening,” Goulden said at the Reuters Global Technology, Media and Telecoms Summit in New York.

But he said that the company aimed to keep its 90 percent stake after the IPO for some time. “I‘m looking at least a couple of years time horizon,” he said.

EMC, which bought VMWare in 2004, announced plans in February to sell a 10 percent stake of the business in an initial public offering. VMWare software lets large computers run several operating systems simultaneously, making it easier and cheaper to manage networks.

EMC’s April filing with the U.S. Securities and Exchange Commission said the IPO would raise up to $100 million. VMWare’s so-called virtualization software allows companies to boost the efficiency of data centers by tapping processing power that would otherwise go unused, allowing one computer to perform work typically done by multiple machines.

Goulden also said EMC was more likely to beat annual revenue and profit targets than meet them, given strong results in the first quarter. EMC said

Exceeding the company’s forecast “is more likely, given the strong start,” he said. EMC in January forecast 2007 revenue growth of about 14 percent to at least $12.7 billion, and net income of at least 64 cents per share.

Goulden also said he expects industry wide global information-technology spending this year to grow 5 percent to 6 percent from 2006, about the same as last year’s rate.

But he said technology spending in the United States, the world’s largest economy, will likely grow more slowly than last year as large U.S. corporations take a “wait-and-see approach to the economy.” Sales to small and medium-sized businesses and sales outside the United States should make up for the difference, however, he added.

“It’s a little bit of caution now,” Goulden said about U.S. technology buyers. “People are looking at the economy and looking at what they bought last year.”

Shares of Hopkinton, Massachusetts,-based EMC closed up 34 cents or 2.2 percent at $15.77 on the New York Stock Exchange on Wednesday. The stock is up 17 percent this year based on Tuesday’s closing price.

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