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5 Big Things To Know About Dell Selling (Or Buying) VMware

‘The Dell ownership structure has been an albatross around the VMware story and ultimately causes the stock to trade at a discount,’ says equity research analyst Daniel Ives of Wedbush Securities.

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A Spinoff Could Eliminate VMware ‘Albatross’

Dell spinning off its 81 percent stake in VMware, which it has held for the past four years, could eliminate what analyst Daniel Ives of financial investment firm Wedbush Securities calls the VMware “albatross.”

“The Dell ownership structure has been an albatross around the VMware story and ultimately causes the stock to trade at a discount,” said Ives in a recent note. “[This] dynamic would be removed if Dell ultimately decided to head down this path.”

Ives said if Dell did not own VMware, it would add $15 to $20 per share “right out of the gates” due to positive knee-jerk reactions from investors. He said the “soap opera” of the Dell and VMware ownership structure has been a “frustration point for investors.”

Dell’s 81 percent stake in VMware has been valued at approximately $50 billion.

 
 
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