EMC has owned VMware since 2004, and in February this year it announced a plan to float around 11% of VMware, in order to help lift EMC’s moribund share price, and to allow VMware to use stock options as a means of attracting and retaining staff.

Yesterday EMC filed an amendment to its S-1 SEC registration document that sets a price of between $23 and $25 for each of the 33 million VMware shares that EMC plans to sell at some as yet unspecified date. If demand is high, EMC says it may sell another 5m shares.

According to the registration document, EMC will still own around 89% of VMware stock after the offering. Multiplying the $24 midpoint share price by the 33m base number of shares being sold, and factoring for that 89% remaining in EMC’s hands gives a total valuation of $7.2bn. If 38m is used as the number of shares sold, the valuation is $8.3bn.

Last year’s revenue at VMware was $704m, giving a value-to-annual-revenue ratio of between 10 and 12 to one That is a lot higher than for a huge majority of software companies, and for example when EMC bought RSA Security it paid five times RSA’s annual revenue.

But VMware is not an ordinary software company, and that ratio is based on last year’s revenue. Despite being a nine-year old business with over 20,000 customers it still has the growth rate of start-up. Its growth actually accelerated slightly last year. During 2006 VMware’s revenue grew by 81%, compared to around 75% growth in 2005. The prospects for continued rapid growth are strong, and the only potential brake on sales is threatened competition from the Xen open source project, which has yet to emerge.

Growth counts for a great deal with investors, and some start-ups with no profits but strong growth have recently seen very high value-to-revenue ratios at their IPO. Isilon for example scored a ratio of around 25:1 at its market debut.

VMware’s registration document says that the stock sale will raise around $741m for EMC. Although VMware is a part of EMC, the registration document says that about $350m of the money raised will be paid to EMC to cover inter-company indebtedness, related to a dividend and to the building of new headquarters for VMware.

EMC is in its quiet period before its earnings announcement on 24 July, and so would make no comments for this story.