DataViews

EMC - (EMC Corporation) VMW - (VMware)

Rating: 1.00 not yet rated(10 votes)    Vote:

You are logged in as | Logout

I've been trying to analyze EMC and VMWare (VMW)

there would seem to be a lot of maket speculation in those stocks,
so I'm trying to obtain an understanding of what's going on

first, from reading the SEC filings:
EMC spun off VMware in a quite successful IPO,
Intel purchased 9.5 million newly issued shares of VMware's Class A common stock at $23.00 per share, and
Cisco Systems purchased 6.0 million shares of VMware Class A common stock at $25.00 per share;

EMC still owns 26,500,000 shares of our Class A common stock
and all 300,000,000 shares of our Class B common stock,
representing approximately 86% of the total outstanding shares of common stock
or 98% of the voting power of outstanding common stock

trying to research the SEC filings gets quite interesting,
trying to follow the CISCO ownership for example, one encounters:
Cisco Systems International B.V. ("CSIBV") of The Netherlands
Cisco Systems Netherlands Holdings B.V. ("CSNHBV") of The Netherlands
Cisco Systems Luxembourg S.a.r.l. ("CSLS") of Luxembourg
Cisco Systems Luxembourg International S.a.r.l. ("CSLIS") of Luxembourg
Cisco Systems International S.a.r.l. ("CSIS") of Switzerland
Cisco Systems (Bermuda) Limited ("CSBL") of Bermuda
Cisco Systems International Holdings Limited ("CSIHL") of Bermuda
Cisco Technology, Inc. ("CTI"), I.R.S. Identification No. 77-0462351 of the State of California
Cisco Systems, Inc. ("Cisco"), I.R.S. Identification No. 77-0059951 of the State of California
which is quite an impressive network (hmmm, a CISCO network pun?),
and perhaps representive of trying to do SEC filing research,
but Cisco is still a rather minority owner,
considering that EMC itself still owns 86% of VMWare stock

when one tries to value the EMC holdings of VMWare
the first problem is that the most recent EMC SEC filing
is their 10Q dated for the quarterly period ending June 30, 2007;
which was prior to the August 2007 initial public offering ("IPO")
which spun off 37,950,000 shares of VMware

in their June 30, 2007 10Q EMC reports Total Stockholder Equity of $10,638,304,000
(there are 2,100,000,000 shares of EMC outstanding)

hmmm, that $10B EMC stockholder equity doe not seem to include
the $37.1B market cap of VMware
(which EMC owns 86% of)

however there is a discrepancy between the
$10B Stockholder Equity EMC reported to the SEC as of June 30, 2007
and the current $47B Market Cap of EMC

stock market speculators seem to be buying EMC
for the purpose of cashing in on EMC's holdings of 86% of VMware stock

which might be a good idea,
if VMware is actually worth its $37B maket cap

however VMware has actaul earnings of less then $1
per each share which is selling for around $100

but Intel and Cisco bought VMware IPO stock you say?
yeah, but at $25 per share, not the current $100,
much different Price/Earnings ratio

one other thing that I feel is worth noting is that
a significant portion VMware products/technologies
is based upon "open source" software,
(GNU General Public License, the GNU Lesser General Public License,
"Apache-style" licenses, "Berkeley Software Distribution," "BSD-style" licenses)

for years my personal computers are dual boot (Windows XP/Linux);
I believe that the free Linux Xen virtualization software
http://en.wikipedia.org/wiki/Xen
is very similar to VMwares core products

and, Microsoft also seems to be quite active in
developing competing Virtual Machine Operating Systems

well, the market momentum is currently tending to favor
speculation in EMC (and VMware)

I have a little invested in the current market frenzy,

based upon the John Maynard Keynes quote that SuziQuant.com noted
about the stock markets ability to stay irrational

although I am quite skeptical about any such tulip speculation