Intel acquires 2.5-per cent stake in software firm VMware

10 July 2007

Intel Corp will invest about $219 million for a stake in VMware Inc. and a seat on the board of the Silicon Valley software company that parent EMC Corp. is taking public.

The investment will help boost the speed of adoption of VMware''s software technology on computers using Intel semiconductors, expanding an ongoing strategic relationship.

VMware said in a regulatory filing with the Securities and Exchange Commission that it expects to sell up to 37.95 million shares to the public during its upcoming IPO for an estimated price of between $23 and $25 per share.

Intel, ranked as the world''s largest chipmaker, will pay $23 a share for 9.5 million class ''A'' common shares of VMware, giving it 2.5 per cent of all outstanding common stock, which after the public offer would reduce to under 1 per cent of voting shares because the stock is divided into two classes in which class ''B'' shares have greater voting power.

VMware ''s products allow businesses to get more use out of computers by harnessing hardware resources that otherwise go wasted, using a technology known as "virtualization."

The software maker''s software turns computers into multiple "virtual" machines by taking takes processing power on a business computer that isn''t being used, reducing the companies need for equipment to buy and maintain in data centres.

Global software giant Microsoft Corp has similar technology but its functionality is widely perceived as being behind that of VMware.