VMware 2009 Annual Report Download - page 36

Table of Contents
Risks Related to Owning Our Class A Common Stock
Our Class A common stock has only been publicly traded since August 14, 2007 and the price of our Class A common stock has fluctuated
substantially since then and may fluctuate substantially in the future.
Our Class A common stock has only been publicly traded since our IPO on August 14, 2007. The trading price of our Class A common
stock has fluctuated significantly since then. For example, between January 1, 2009 and January 31, 2010, the closing trading price of our
Class A common stock was very volatile, ranging between $19.89 and $47.45 per share. Our trading price could fluctuate substantially in the
future due to the factors discussed in this Risk Factors section and elsewhere in this Annual Report on Form 10-K.
Substantial amounts of Class A common stock are held by our employees, EMC and Cisco Systems (“Cisco”), and all of the shares of our
Class B common stock, which may be converted to Class A common stock upon request of the holder, are held by EMC. Shares of Class A
common stock held by EMC (including shares of Class A common stock that might be issued upon the conversion of Class B common stock) are
eligible for sale subject to the volume, manner of sale and other restrictions of Rule 144 of the Securities Exchange Act of 1933 which allow the
holder to sell up to the greater of 1% of our outstanding Class A common stock or our four-week average weekly trading volume during any
three-month period and following the expiration of their contractual restrictions. Additionally, EMC possesses registration rights with respect to
the shares of our common stock that it holds. If EMC chooses to exercise such rights, its sale of the shares that are registered would not be
subject to the Rule 144 limitations. If a significant amount of the shares that become eligible for resale enter the public trading markets in a short
period of time, the market price of our Class A common stock may decline.
Additionally, broad market and industry factors may decrease the market price of our Class A common stock, regardless of our actual
operating performance. The stock market in general, and technology companies in particular, also have often experienced extreme price and
volume fluctuations. In addition, in the past, following periods of volatility in the overall market and the market price of a company’s securities,
securities class action litigation has often been instituted, including against us, and, if not resolved swiftly, can result in substantial costs and a
diversion of management’s attention and resources.
If securities or industry analysts do not publish or cease publishing research or reports about us, our business or our market, or if they
change their recommendations regarding our stock adversely, our stock price and trading volume could decline.
The trading market for our Class A common stock will be influenced by the research and reports that industry or securities analysts may
publish about us, our business, our market or our competitors. If any of the analysts who may cover us change their recommendation regarding
our stock adversely, or provide more favorable relative recommendations about our competitors, our stock price would likely decline. If any
analyst who may cover us were to cease coverage of our company or fail to regularly publish reports on us, we could lose visibility in the
financial markets, which in turn could cause our stock price or trading volume to decline.
Delaware law and our certificate of incorporation and bylaws contain anti
-takeover provisions that could delay or discourage takeover
attempts that stockholders may consider favorable.
Provisions in our certificate of incorporation and bylaws will have the effect of delaying or preventing a change of control or changes in
our management. These provisions include the following:
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the division of our board of directors into three classes, with each class serving for a staggered three
-
year term, which would prevent
stockholders from electing an entirely new board of directors at any annual meeting;
•
the right of the board of directors to elect a director to fill a vacancy created by the expansion of the board of directors;