EMC on Wednesday said it plans to sell about 10 percent of its VMware virtualization software subsidiary via an initial public offering.
Plans call for EMC to keep the remaining shares of VMware, and the Hopkinton, Mass.-based storage giant said it doesn't aim to spin off or divest its ownership stake.
"We expect the IPO to unlock more of VMware's value for EMC shareholders while also strengthening its ability to retain and attract the software industry's top talent," EMC Chairman and CEO Joe Tucci said in a statement.
The VMware IPO is slated to occur this summer, according to EMC. When the transaction is completed, VMware will be a publicly traded entity, and Tucci and Diane Greene, VMware president and EMC executive vice president, are expected to be named to VMware's board. Greene is a VMware co-founder.
EMC said the IPO stands to give the company a better picture of VMware's performance, help spur VMware's growth, and bolster VMware's employee retention and recruitment through a broad equity award pool.
In addition, the move is expected to reinforce EMC's commitment to VMware's open platform strategy. "VMware's open platform strategy is critical to the growth of virtual infrastructure as an industry-standard layer that benefits all customers and partners," Tucci said in a statement.
VMware had record sales in 2006, growing revenue 83 percent to $709 million, EMC reported. VMware closed the fourth quarter of 2006 with year-over-year sales growth of 101 percent, delivering accelerating year-over-year growth for the fifth straight quarter, EMC said.
"We expect that the IPO will help us execute on our vision of an industry-standard virtual infrastructure," Greene said in a statement. "It should enable us to accelerate our ability to find and attract great people, continue to invest in great product development, and grow an even stronger partner ecosystem."
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