VCE: What Did $1B Run Rate Cost EMC, VMware, Cisco, Intel?
VCE‘s annual bookings run rate is approaching $1 billion. But how much have investors EMC (NYSE: EMC), VMware (VMW), Cisco Systems (NASDAQ: CSCO) and Intel (INTC) together pumped into VCE, the Virtual Computing Environment company? The answer appears to be about $1 billion, according to some educated guesses from The VAR Guy. Here’s the math.
First, the background. VCE last week named Praveen Akkiraju, a Cisco veteran, as its CEO. He joins President Frank Hauck, in the executive suite. VCE Chairman Michael Capellas last year dropped the CEO title with little explanation from the company.
VCE now has 1,200 employees and an annualized order run rate approaching $1 billion, a spokesperson told Business Insider last week. Those figures suggest there’s strong demand for converged VCE’s Vblock solution, which converges virtualization, storage, networking and server solutions in data centers.
VCE has also been expanding its channel partner program — including a relationship with Tech Data. Plus, the company has relationships with BMC, CA Technologies, Trend Micro and Nimsoft.
The Other Side of the Story
But how much has VCE cost to build? So far, the answer is nearlt $1 billion in combined funds from EMC, VMware, Cisco and Intel, The VAR Guy estimates.
That estimate is based on the following: As of April 28, 2012, Cisco confirmed that it had a $322 million cumulative gross investment in VCE. That $322 million represented a 35 percent stake in VCE, Cisco indicated. So quick math suggests funding from all VCE backers is approaching $950 million, with the $1 billion milestone approaching in the next few months.
In a May 2012 SEC filing, Cisco indicated:
“Over the next 12 months, as VCE scales its operations, the Company expects that it will make additional investments in VCE and may incur additional losses proportionate with the Company’s share.”
Translation: VCE’s investors will keep pumping money into the company as long as VCE continues to deliver that impressive bookings run rate growth.