New Google may help stock market

London, August 13:

A Californian technology company US investors are already dubbing ‘the new Google’ will this week finalise the price of its shares in one of US market’s most eagerly awaited flotations since the dotcom boom.

After just over a week of investor road shows, VMware, based in Palo Alto, has already raised the price expected in its flotation on the NewYork Stock Exchange to between $27 and $29 from its original forecast of $23 to $25. At those levels the company could be worth more than $10 billion. But some analysts on Wall Street believe the stock could rise to $40 or more at its opening, which could come as early as today.

VMware is majority owned by the US data storage and security group EMC, but leading technology companies have recently been buying stakes. Last month Intel spent $218.5 million buying shares that will give it a 2.5 per cent stake in the business after the flotation. The internet networking company Cisco then bought 6m shares in the company for $150 million, also giving it a small stake. The company has been cited by Microsoft as a potential competitor and at one point was seen as a possible takeover target for the software market leader.

VMware is at the forefront of a new segment of technology called virtualisation. Rather than having software installed on an individual computer or server, where it is often vulnerable to viruses and other forms of attack unless updated regularly, virtualisation separates the hardware from the software. This means one computer or server can run various different programs — even operating systems — on the same machine.

It is an updated version of the application service provider model, which was popular in the dying days of the last dotcom boom. But while the ASP model meant merely hosting a personal computer’s software onser-vers on the internet, virtualisation software actually sits betweena computer or server’s operating system and actual hardware. As a result, sensitive parts of any system can be partitioned so that viruses and other ‘malware’ cannot infiltrate.