In my article I sited research from Bernstein Research’s Toni Sacconaghi suggesting that if VMware is worth $10 billion, as many observers think it is, then its stock will price at about $27 per share. VMware itself recently weighed in on the subject of its valuation. According to an amended filing with the SEC, VMware made a gonzo stock-option grant to its employees, 29 million shares, on June 5 at a price of $23 a share. Sacconaghi says that equates to a valuation of about $8.5 billion, and he believes VMware is being conservative. Neither VMware nor its owner, EMC (EMC) – which is carving out a piece of VMware for the public to buy – is commenting on when the IPO will happen.

But it’ll be interesting if the IPO happens at a price significantly above $23 in the near term. If so, then employees would have gotten options at a price much lower than the new valuation. That’s often referred to as cheap stock, though VMware will make the case that, as the June 5 grant was made in consultation with its bankers, it’s a fair price and doesn’t require an additional compensation expense that cheap stock typically would entail.

In the unlikely event VMware prices below $23, not only might the stock be a bargain, but you’d have a lot of at least temporarily unhappy employees there.