The return of the moonshot IPO?

Just like the Perseids that streaked across the sky this weekend, VMware, a boring little software company, is leaving a meteoric trail, up and away, on the stock ticker. Bought by EMC, the storage-hardware maker, in 2003 for a mere $635 million, VMware's backers had hoped to spin it off at a value of $10 billion. A staggering amount — but staggeringly low, it turns out. After the stock started trading today, it jumped from its $29 offering price to $55, almost doubling the company's value before the stock fell back a bit. At its peak earlier in the day, VMware was worth nearly $20 billion. Ashlee Vance of The Register has been tracking the stock live all day, as have others, but lost amidst the tick-tock of the stock price is the answer to this question: What does this mean for the Valley?

It means an avalanche of IPO filings, sooner rather than later. Since Google's IPO in 2004, there's been a dearth of public offerings, leaving investors starved for new issues to invest in. Expect lawyers and bankers in Palo Alto and San Francisco to, once again, start burning the midnight oil preparing S-1 filings.

VMware's IPO today was what, in the bad old days of the first Internet boom, the most facile commentators dubbed a "moonshot" — an IPO with a clear trajectory upwards, never mind the fundamentals. VMware's offering was clearly underpriced, raising almost a billion dollars less than it could have if its investment bankers had guessed more accurately how much demand there would be for its shares. Of course, a successful IPO is good PR, but that much money left on the table seems like a high price to pay for a moonshot.

The question, of course, for future companies seeking their own moonshot IPO is whether they can repeat VMware's feat. VMware's in a hot market — so-called "virtualization" software, which lets companies more efficiently use the servers they have for multiple tasks. It's a real business, in other words, with deep-pocketed customers.

It's likely that Facebook and other oft-mentioned IPO contenders can ride the current market's hunger for tech. Right now, investors are looking for anything that doesn't have "subprime" in its business description. But as the markets calm down, and investors grow more discriminating, investors will, one hopes, ask hard questions. At the very least, questions harder than "How high will this moonshot rise?"