EMC (EMC) recently raised the price range for next week's IPO of VMware (VMW) from $23 - $25 to $27 - $29 per share.
Many have attributed EMC's rise over the past 6 months to "unlocked" value attributable to the company's 90% stake of VMware, which they will continue to control after the IPO. Oddly, the price of EMC has declined over the past week. Of course, this may have been due to the overall weak market.
Is the most optimistic valuation for VMware already priced into EMC? The question remains and next week will be telling.
Friday, August 10, 2007
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8 comments:
I really think that EMC just got dragged down with the market this past week. I expect EMC to rise $1-3 by Wednesday. We will see...
Recently fell below its 20 day MA which had been acting as support since April. Insiders & instituions have been dumping it. Only about 2% of float is short--won't get any help from short covering if shares continue to drop. Given the above and the negative mood of the market I'm puting this fundamentaly sound company on my watch list for a possible purchase at a later date and a lower price.
EMC had run up too far too fast. The IPO price ($10B total) of VMW is already priced into EMC. EMC will rise only if VMW blows away all the predictions. Each $1B increase above the IPO price (approx $3 per share) in VMW theoretically adds 50 cents to the price of EMC. If VMW doubles, EMC goes up $4-5.
the ipo is not factored in because they just prised it. also if emc owns 90% of vmware then should emc stock price be atlease 90% of vmware's price?
Note to the above comment . . . I don't know who you are, but your comment clearly exposes that you have no idea what you are talking about. This IPO is dangerous for the dumb. I suggest you stay away until you learn more . . . a lot more . . . about what you are doing.
could you (post - August 11, 2007 6:22 PM ) review the calculation w/ me. It seems it is based on "IPO price ($10B total) of VMW". I thought the price is midpoint $28 X 33million shares = $924M ~ $1B Total? Also, my (mis?)understanding is that Intel has bought 9.5M (or $218M/$23/share) of VMW (Cisco bought $150M EMC, I thought, not VMW). Does that mean only about 33-10 = ~ 23m shares for rest of IPO/market?
Hmm - regarding previous post - EMC is only releasing 10% of VMW stock to IPO so 924 (~$1B) x 10 = $10B is correct.
I concur with the previous writer, saying the total B $ 10.0 is already priced in emc.
Now its all up to vmw buyers to push Emc stock higher than 19.00 vis a vis believing that vmw is worth more than $ 28.00
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