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   Technology StocksVMware, Inc. (VMW)

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From: Glenn Petersen1/1/2019 11:49:30 AM
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Here's What's Going On With VMware and Dell Today

VMware is down big after paying a massive special dividend, Dell is a publicly trading company again, and the tracking stock is no more.

Timothy Green
Motley Fool
Dec 31, 2018 at 2:46PM

What happened

Dell Technologies completed its journey back to the public markets last Friday by acquiring all outstanding Dell Technologies Class V ( NYSE:DVMT) stock. The transaction also involved VMware ( NYSE:VMW), which Dell controls with a roughly 80% stake. VMware paid shareholders a one-time $11 billion dividend on Friday as part of the deal, with most of that payout going to Dell.

Shares of Dell were up about 3.4% at 1:30 p.m. EST, while the Class V shares are no longer trading. Shares of VMware were down 14.3% from Friday's close, reflecting the payment of the special dividend. Today is the ex-dividend date. Adjusted for the special dividend, VMware stock was up about 3%.

source: Dell.

So what

The Dell Class V stock was a tracking stock intended to track the performance of Dell's stake in VMware. The stock was originally issued as part of Dell's deal to acquire EMC, which closed in 2016. EMC owned 81% of VMware prior to being acquired by Dell.

Dell successfully exchanged a mix of cash and new Class C shares for all outstanding Class V shares on Friday. The company paid $14 billion in cash and issued nearly 150 million Class C shares to retire the tracking stock. The move greatly simplifies Dell's corporate structure, and it brought Dell back to the public markets without the need for a public offering.

Class V shareholders had the option to receive either $120 in cash or 1.8066 Class C shares for each Class V share, up to a $14 billion aggregate cash limit. More than 90% of shareholders chose the cash option, with the rest picking the share option. Because the cash limit was exceeded, shareholders who opted for cash will receive a portion of their payment in Class C stock. The cash option was the smart move, with shares of the Class C stock currently trading for around $47 per share.

As part of the transaction, VMware paid a one-time special dividend totaling $11 billion. The dividend is payable to shareholders of record at the close of business on Dec. 27, with a payment date of Dec. 28. Dec. 31 is the ex-dividend date. The $11 billion payment works out to $26.81 per share.

"Dell Technologies was created to be the essential infrastructure company for this digital era, and with today's announcement, we are aligning the interests of our stakeholders to benefit from the integrated innovations and value creation from across our entire family of businesses," said Dell CEO Michael Dell in the press release announcing the completion of the transaction.

Now what

With the tracking stock gone and Dell back in the public markets, investors can now bet on the company as a whole, not just on its stake in VMware. Dell's revenue has been growing briskly, with 15% year-over-year growth in its fiscal third quarter. But the company is still saddled with a substantial amount of debt. As of Nov. 29, Dell had about $48.7 billion of debt and $17.5 billion in cash. The dividend received from VMware will pay for part of the cash portion of the tracking stock purchase.

VMware now has quite a bit less cash after paying the one-time dividend. Total cash as of Nov. 29 was $13.5 billion, along with about $4 billion of debt. This deal will make VMware's balance sheet a lot weaker.

After going private in 2013 and creating its complex share structure a few years later to finance the EMC deal, Dell has undone those moves and is once again a public company. How it all works out this time around remains to be seen.

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From: JakeStraw1/9/2019 11:30:57 AM
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VMware is now covered by analysts at Barclays PLC. They set an "overweight" rating on the stock.

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From: JakeStraw2/26/2019 2:06:03 PM
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New VMware Kubernetes product comes courtesy of Heptio acquisition

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From: JakeStraw3/1/2019 8:40:00 AM
1 Recommendation   of 342
VMware Reports Fourth Quarter and Fiscal Year 2019 Results
“Q4 was a terrific ending to a strong fiscal ’19 driven by broad-based strength across our diverse product portfolio and in all three geographies,” commented Pat Gelsinger, chief executive officer, VMware. “VMware is providing the essential ubiquitous software foundation for our customers’ digital transformations while we also work to drive positive global impact across our people, products and the planet.”

“We’re pleased with our performance in the quarter and for the year, including the return of $11 billion dollars to shareholders through a special dividend in December,” said Zane Rowe, executive vice president and chief financial officer, VMware. “We continued to drive deeper engagement with our customers and partners, who leverage the VMware portfolio for their business initiatives.”

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From: JakeStraw3/1/2019 2:44:14 PM
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VMware had its price target raised by analysts at Deutsche Bank AG to $200.00. They now have a "buy" rating on the stock.

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From: JakeStraw4/29/2019 2:12:55 PM
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Microsoft Corp. unveiled a partnership with VMware Inc. in a bid to bring more customers to its Azure cloud-computing service, emulating a pact that has benefited rival Inc.

The agreement will let VMware customers move their technology systems to Microsoft’s Azure cloud-computing services, the companies said Monday in a statement. Amazon Web Services, the leader in the market for cloud services, struck a partnership with VMware in 2016 to lure customers of the virtualization software maker to AWS.

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From: JakeStraw5/17/2019 11:37:57 AM
1 Recommendation   of 342
VMware had its price target raised by analysts at Barclays PLC from $200.00 to $224.00. They now have an "overweight" rating on the stock.

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From: JakeStraw5/23/2019 3:13:23 PM
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VMware to Present at the Bank of America Merrill Lynch Global Technology Conference

VMware, Inc., today announced that Sanjay Poonen, VMware’s chief operating officer, customer operations, will present as a speaker at the Bank of America Merrill Lynch Conference in San Francisco, CA on Tuesday, June 4, 2019 at 11:00 a.m. PT/ 2:00 p.m. ET.

A live webcast will be available on VMware’s Investor Relations page at The replay of the webcast will be available for two months.

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From: Glenn Petersen6/1/2019 11:10:04 AM
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VMware Q1 tops expectations, revenue up 13% to $2.27 billion

VMware also reported an unexpected gain of $132 million from its investment in Pivotal Software.

By Natalie Gagliordi for Between the Lines
May 30, 2019 -- 20:37 GMT (13:37 PDT)

VMware delivered strong first quarter financial results Thursday that beat market expectations. The virtualization giant reported a net income of $505 million, or $1.21 per share. The income includes an unexpected gain of $132 million from VMware's investment in Pivotal Software, the company said.

Non-GAAP earnings were $1.32 per share on revenue of $2.27 billion, up 13% year over year. Wall Street was looking for earnings of $1.28 a share and revenue of $2.24 billion.

VMware, a Dell Technologies portfolio company, said license revenue for the quarter was $869 million. Operating cash flows came to $1.27 billion, while free cash flows for the quarter were $1.2 billion.

In terms of guidance, VMware is maintaining its fiscal 2020 forecast, with expected revenue of $10.03 billion. Analysts are expecting revenue of $10.02 billion with earnings of $6.53 a share. VMware also said that its board has authorized up to $1.5 billion in stock repurchases through fiscal 2021.

"Q1 was a good start to fiscal 2020 with strength across our comprehensive solutions portfolio," said VMware chief executive Pat Gelsinger. "We were especially pleased to announce a number of agreements during the quarter with key partners Amazon Web Services, Dell and Microsoft as customers continue to turn to VMware's cloud infrastructure technology to enable their digital transformations."

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From: Glenn Petersen8/14/2019 9:11:15 PM
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Pivotal Software surges 60% after VMware says it’s in talks to acquire the company

Published 3 hours agoUpdated 2 hours ago
J ordan Novet
  • VMware contributed to the formation of Pivotal in 2013.
  • Pivotal stock has fallen 66% in the past year.
Pivotal shares rose as much as 72% in extended trading on Wednesday after VMware said it’s proceeding with an agreement to acquire all outstanding shares of Pivotal’s class A stock at $15 per share in cash, an 80.7% premium on Pivotal’s $8.30 closing price.

VMware also said in a regulatory filing that it has requested that Dell exchange all outstanding shares of Pivotal’s class B stock, other than class B Pivotal shares owned by VMware, for Class A VMware stock. Dell controlled almost 81% of VMware’s outstanding common stock and more than 97% of the combined voting power of VMware’s outstanding stock as of May 3. Dell and Pivotal are negotiating an exchange ratio for the shares.

The transaction could contribute to the further diversification of VMware, which has moved to collaborate with cloud infrastructure providers like Amazon in order to enable existing customers to run their computing workloads in whatever environment they like.

Shares of Pivotal have declined 66% in the past year. On June 5 Pivotal stock declined 41% after the company issued guidance that was below what analysts were expecting.

Pivotal went public in April 2018. VMware and DellEMC both contributed assets when Pivotal was established in 2013.

As a result of an agreement with Dell, VMware is the selling agent for certain Pivotal products, such that VMware collects cash that is then remitted to Pivotal, net of a contractual agency fee. As of May 3, VMware had a 16% financial interest in Pivotal and a 24% voting interest in the company.

In a statement of its own, Pivotal said on Wednesday that although it is in talks with VMware about a “potential business combination,” an agreement has not been made.

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