VMware Delivers 2007's Best First-Day IPO Performance

VMware, based in Palo Alto but owned by EMC of Hopkinton, went public today. The IPO price was $29, and the stock closed at $51, according to The Wall Street Journal. From the piece:

"Considering their light competition and extreme growth continuing, this may still be a reasonable valuation," said Scott Sweet, managing director of IPOBoutique.com, an IPO-research service in Tampa, Fla., of the company's first-day's gains. Mr. Sweet received shares in the offering for his personal account, but sold them in early trading Tuesday.

Rachel Chalmers, an analyst at technology-research firm the 451 Group, says VMware's virtualization software can reduce office space dedicated to hardware, cut down on the amount of air-conditioning needed to keep servers cool and run upgrades and do maintenance without having to shut down machines. VMware began shipping a new product last year that targets desktop computers, which she says is the next market frontier for virtualization. The company estimates that only 1% of the world's business desktops are currently using virtualization software.

Since its founding in 1998, "VMware has grown faster than any other software company we have come across," says Ms. Chalmers, whose husband is employed by another virtualization-software firm, XenSource.

The Journal also offers a primer on what VMware does, calling it "an unsexy technology with a sexy stock price."