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Great site for homework!
GlobalInvesting411.com

Source(s):

Long EMC

Great site for homework!
GlobalInvesting411.com

Buy EMC under $18.

In hindsight, wait. PPS 7/31=18.51. Today=17.72.

Source(s):

Yahoo Finance

I would have to agree with the comment two below mine. I think a great way to
play the VMware IPO is through EMC call options. I picked up some Jan 2008 $20
options for $1.30 a piece this past week. Its a good way to get in on the
action without using too much capital. Anyone else think this is a good way to
play it?

I bought half of my position today in EMC, will buy the other half close to the
IPO or on a day when the dreaded subprime pulls down everything including EMC.
Might buy the IPO stock depending on the price. Jim and James have a great short
video that explains VMWare technology which was a factor in my investing in EMC
along with other homework.

Let's use some numbers:
* 33 million VMWare shares will be issued
* Let's assume they surge to $40
* So, the market cap to the "public" part of VMWare will be
$40 x 33 million = $1.3B
* As EMC will hold 90% of the shares, they will sit on a
value of 9 x $1.3B = $12B (rounding up)
EMC's current market cap is $39 billion. So, given the above assumptions, their
market cap would jump by $12B or 30%. That'll make a $24 stock price (up from
$18.7 today).

$40 may be an aggressive price target. So, let's assume the VMWare stock only
surges to $35. The EMC stock would still jump by 25%.

These are not bad profits! But if it's still not enough, the Jan 2008 calls are
not expensive, and allow you to add leverage to those equations.

In answer to Jim's question below - we don't need to plunk down our money with
one of the IPO underwriters to take advantage of the VMWare IPO.

First, EMC is retaining just over 89% of the it's stake in VMWare. That means
the value of EMC as a company should rise dramatically as a result of unlocking
the cash value of VMWare. While it won't match VMWare's explosion in share
price during the IPO, I cannot see why EMC will not track up to $23-25 per share
very quickly. This is all assuming, of course, that there's no bad news about
EMC or VMWare in the meantime. This seems to be the hottest IPO of 2007.

Second, it's nearly impossible to buy at the IPO issue price because I checked
into it with the companies doing the underwriting. I couldn't even get a call
back even though I was willing to commit serious money to the IPO. Unless you
know someone - or someone owes you big time, they're not even going to respond
unless you have a ton of money to invest and you are one of their preferred
account holders. Plus, do you really want to be locked into IPO shares for
MONTHS?

Finally, you MIGHT get lucky if VMWare shares take a dip after the IPO hits.
With as much hype as this IPO has behind it (backed by a solid tech company), I
doubt that's going to happen.

As far as I can see, the only other way to play this is through an EMC call
option with a strike price of $19-$20 (October or January). But again, once the
IPO was announced, my thought is the option prices will be riskier tomorrow
morning than buying more shares of EMC.

At this price point (less than $19), EMC is a very attractive buy for a month
long play. If the share price goes to $24, you're looking at a 30%+/- gain.
Some people are saying $30 for EMC. I sincerely doubt that's going to happen.
$25 would be my top estimate during the two weeks following the IPO.

For those who like extreme risk - if EMC goes too high, I'd consider shorting it
if I was a big meanie. Those shorts are attractively priced.

The date they came out with is Aug. 14th.
Priced @ 23-25/share.
We know for the small timers, we can't get that price, once the market opens,
it'll be easily at least 39+

Here is an answer I gave to someone else via email earlier:

This is my opinion of EMC: I think that we should see EMC rise over the next few
weeks as the IPO gets closer. The revaluation of EMC based on the valuation of
VMWare is going to be what drives the price of EMC up the most. Since EMC is
only spinning of 10% of VMWare, most of the VMWare valuation will go to EMC's
bottom-line. I just saw that CSCO is buying their portion directly from EMC,
which means that cash will go straight to EMC. CSCO and INTC have already
committed to buying nice chunks of the IPO. The valuation of VMWare is already
starting to increase. When INTC committed, it was around $8.5B, when CSCO
committed it was around $9.5B. That's great for EMC shareholders.

The revaluation of EMC will occur when the street learns what price the VMWare
stock is worth the day of the IPO.

Now do you want to buy EMC before the IPO?