Oct 9, 2007

nice investment

In early 2004 EMC (a storage company) bought a small company called VMWare for $635M. Earlier this year EMC spun out VMWare in an IPO. It is currently worth $36.5B or about 35 times current sales. That's quite a return.

I believe Microsoft also looked at VMWare years ago and ended up buying Connectix instead. Microsoft may end up regretting that move because currently they are at least 2 years behind VMWare products. In many ways VMWare's Hypervisor and virtualization products could become the most prominent operating systems on both desktops and servers in the next 5-10 years, hence the insane market cap. Everyone is looking at Google as Microsoft's main competitor but I can think of a number of scenarios where VMWare could be the real threat.

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