VMware Already Investing In IT Infrastructure Company (VMW, TMRK)

Terremark Worldwide, Inc. (NASDAQ:TMRK) is not a name that normally comes up in discussions among tech investors, although it is a provider of managed IT infrastructure services.  What is going to draw attention to it on Tuesday is that virtualization leader VMware, Inc. (NYSE:VMW) is taking an equity stake in Terremark.

VMware will buy 4 million shares of newly issued Terremark common stock at a price of $5.00 per share for $20 million.  Terremark shares closed at $4.80 today after a 7% gain.  Upon completion, VMware will own about 5% of Terremark’s total common stock on a fully diluted basis.  Before the new shares, Terremark’s market capitalization was just under $286.5 million.

These two companies have worked together for years.  To show a recent example of Terremark’s work and ability, the company recently announced that Second Life’s Linden Lab selected the Network Access Point of the Capital Region to colocate the IT infrastructure that brings the 3D virtual world environment to life.

Terremark also gave an earnings report: Adjusted EBITDA for Q4 was $22.1 million, a 63% gain year-over-year and 20% sequentially. Its bookings were a record $31.8 million for the quarter, and income from operations rose 63% annually and 32% sequentially to $10.8 million.  Quarterly revenues were $250.5 million, a gain of 34% year over year.  Lastly, 46 new customers were added in the quarter, bringing the total number of customers to 1,100.

Terremark has been public since mid-2000 and was north of a $30 stock briefly on a split-adjusted basis.  Its 52-week range is $1.85 to $7.67.

JON C. OGG
MAY 26, 2009