If an Intel (NASDAQ:INTC) investment of $200+ million for a 2.5% stake into VMware wasn’t good enough, EMC Corp.’s (NYSE:EMC) soon to be spin-off is getting a new investor: enter Cisco Sytems (NASDAQ:CSCO). Cisco will purchase $150 million of VMware Class A common shares currently held by EMC Corporation and will have close to a 1.6% stake in the company. Based on the dual classes of shares it will have less than a 1% voting stake.
According to the release, this will enhance efforts and collaboration. Cisco’s purchase is intended to strengthen inter-company collaboration towards accelerating customer adoption of VMware virtualization products with Cisco networking infrastructure and the development of customer solutions that address the intersection of virtualization and networking technologies. VMware and Cisco also entered into a collaboration agreement that expresses their intent to expand cooperative efforts around joint development, marketing, customer and industry initiatives. The companies intend to foster solutions for enhanced datacenter optimization and extend the benefits of virtualization beyond the datacenter to remote offices and end-user desktops.
We’ll see how this all pans out, but at this point EMC is setting an even more solid value-base for its upcoming hot partial IPO.
Jon C. Ogg
July 27, 2007
Jon Ogg can be reached at email@example.com; he does not own securities in the companies he covers.