Data center News
5 Things To Know About The New Public Dell And Dell's Stock
Here are five things customers and partners need to know about the new public Dell Technologies after the company hit the New York Stock Exchange on Dec. 28, 2018.
Dell Technologies Hits The Public Market
Dell Technologies entered the public market on Dec. 28 after a historic $24 billion cash and equity deal through a VMware stock swap, marking the first time since 2013 that Dell is a public company. With its former DVMT tracking stock terminated, investors can now bet on Dell Technologies as a whole and not just on its stake in VMware.
Dell CEO and founder Michael Dell told CRN last month that he's bullish about his company's future as a public entity and the one-stop-shop leader in digital transformation. "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 in a statement on Dec. 28 immediately after becoming public.
Here are the five most important things you need to know about the new, public Dell Technologies.
DELL Opens At $46
On Dec. 28, the Round Rock, Texas-based infrastructure giant debuted on the New York Stock Exchange at $46 per share under the ticker symbol “DELL”. The company issued approximately 150 million shares of its new DELL Class C common stock in connection with the deal. Dell's market cap is roughly $17 billion and has approximately 718 million in common stock in total. The DELL stock reached a high of $49.10 per share, but is currently hovering around $47 per share as of Jan.2.
Dell's fiscal year 2019 revenue guidance still remains the same as a public company with sales expected to be between $90 billion to $92 billion. Dell's Technologies former DVMT Class V common stock has stopped trading.
Analysts Predict Stock To Climb
Financial analysts are expecting Dell's share price to steadily climb this year. JPMorgan issued a $60 price target with analyst Paul Coster saying Dell is a formidable leader in client solutions.
"It is with fuller integration of EMC and VMware that Dell is recapturing share in the IT infrastructure market, leveraging global sales capacity, manufacturing scale, product breadth, and technology differentiation to become a one-stop IT shop for customers in all geographies and market segments," Coster said in a new report to clients.
Morgan Stanley analyst Katy Huberty also said she expects Dell's stock price to increase thanks to the company's storage push. "We see storage as the biggest opportunity to take share given the refresh of Dell's midrange product line and improving sales productivity," Huberty said in a recent note.
Michael Dell: 'No Change' Becoming Public
Michael Dell told CRN that the industry should not expect a monumental change in the company's overall technology and go-to-market strategy as a public entity.
"For our partners, for our customers and for our team members, there's really no change," said Dell. "We're operating with the same approach we have been for the last five, six years. We've been very clear that we're focused on the medium and long term, and we're investing for growth. … We're in a very good spot. The demand for technology infrastructure is going to remain very robust. We have a leading position that we don't take for granted. We have to work hard every day to earn the trust of partners and customers, but momentum is very good."
91% Of DVMT Shareholders Picked Cash Option
Shareholders of the former DVMT tracking stock had the option to receive either $120 in cash per share, not exceeding $14 billion, or 1.8066 of the new Class C common stock for each DVMT stock. Dell said 91.2 percent of DVMT shares elected to receive cash, surpassing the $14 billion aggregate cash limit, with the remaining shares choosing stock in the new DELL Class C stock. Shareholders who opted for cash will receive a portion of their payment in the newly public company.
New Dell Will Spur More VMware Integration
Dell Technologies CFO Tom Sweet told CRN that Dell EMC and VMware will have tighter technology ties than ever before in 2019. Sweet, executive vice president and CFO of Dell Technologies, said the new public company will have a simplified capital structure that will open the door for tighter and faster integrations between the two companies.
"You look at the number of solution workstreams that we have going right now with VMware -- whether it's around hyper-converged infrastructure or Workspace ONE in our client space or around what we're doing with vSAN and vSAN Ready Nodes – so across the spectrum, you're going to see us accelerate a number of these integrated solutions. We're optimistic and excited about it," said Sweet.
Round Rock, Texas-based Dell owns 81 percent of VMware through its 2016 acquisition of EMC for $67 billion. However, VMware remains an independent company under the Dell Technologies umbrella. Dell leveraged its VMware relationship to go public through a VMware tracking stop swap rather than going the traditional IPO route to the public market.