Menu
Dell mulls spinning off VMware stake: report

Dell mulls spinning off VMware stake: report

Team assembled to assess future of VMware

Michael Dell (Dell Technologies)

Michael Dell (Dell Technologies)

Credit: Dell Technologies

Dell Technologies is considering spinning off its US$50 billion stake in VMware, according to a report in the Wall Street Journal (WSJ).

The vendor is also exploring other steps that could include buying the rest of the cloud computing software maker, the Journal reported, citing people familiar with the matter. Dell, which is the controlling stakeholder of VMware, did not immediately respond to a Reuters request for comment.

According to the WSJ report, Dell’s evaluation process was in the early stages and involved groups to examine options with its VMware stake. However, any decisions were said to be "unlikely" to occur before 2021.

Dell has an 81 per cent stake in VMware, which increased in 2018 as part of an effort to buy back shares at US$120 per share and return Dell to the stock market. Rumours were rife during that time when it was revealed that Dell was exploring a range of options as part of a review process.

Currently Dell's stake is valued at roughly US$50 billion, while Dell's own market capitalisation stands at US$36 billion, according to WSJ.

On May 29, Dell revealed it had beaten analysts' estimates for quarterly revenue, boosted by demand for its workstations from companies moving more employees to work from home due to the coronavirus outbreak.

Revenue from the client solutions group, which accounts for half of its revenue and includes desktop PCs, notebooks and tablets, rose 2 per cent to US$11.1 billion in its fiscal first quarter. Commercial notebooks reported double-digit unit and revenue growth, while mobile workstations posted high-single-digit revenue growth, the company said.

"In Q1, we saw orders with banking and financial services, government, healthcare and life sciences customers up 15 per cent to 20 per cent," chief operating officer Jeff Clarke said in a statement.

But higher spending by companies towards enabling remote work, as well as weak demand in China, weighed on Dell's data centre business. Meanwhile, sales from VMware jumped 12 per cent to US$2.76 billion.

Recently the two companies announced a tighter integration between VMware Cloud on Dell EMC within its version 2 release which offers improved support for high-density and high-performance data centre applications.

VMware Cloud on Dell EMC consists of VMware’s high-performance compute, storage and networking software, powered by VMware vSphere, vSAN and NSX, tightly integrated with Dell EMC VxRail hyperconverged infrastructure (HCI) hardware and delivered as a service. These solutions are all managed by VMware.

In February, Dell revealed the sale of its cyber security unit, RSA for US$2.08 billion to a consortium headed by Symphony Technology Group, Ontario Teachers Pension Plan Board and AlpInvest Partners.

The two companies expect the deal to close within the next six to nine months, claiming until then things would remain business as usual. In a blog, Dell Technologies vice chairman products and operations, Jeff Clarke said it was the right long term strategy for both companies. 

“In determining the best long-term future for RSA, we sought a partner that was enthusiastic about RSA’s mission, committed to its customer and partner base, and interested in maximising the power of RSA’s talent, experience, and tremendous growth potential. We believe Symphony Technology Group will be the right custodian to achieve these goals,” he said. 

(With Reuters; Additional reporting by Uday Sampath in Bengaluru; Editing by Maju Samuel)


Follow Us

Join the newsletter!

Or

Sign up to gain exclusive access to email subscriptions, event invitations, competitions, giveaways, and much more.

Membership is free, and your security and privacy remain protected. View our privacy policy before signing up.

Error: Please check your email address.

Tags VMwareDell Technologies

Events

Featured

Slideshows

Meet the Reseller News 30 Under 30 Tech Awards 2020 winners

Meet the Reseller News 30 Under 30 Tech Awards 2020 winners

This year’s Reseller News 30 Under 30 Tech Awards were held as an integral part of the first entirely virtual Emerging Leaders​ forum, an annual event dedicated to identifying, educating and showcasing the New Zealand technology market’s rising stars. The 30 Under 30 Tech Awards 2020 recognised the outstanding achievements and business excellence of 30 talented individuals​, across both young leaders and those just starting out. In this slideshow, Reseller News honours this year's winners and captures their thoughts about how their ideas of leadership have changed over time.​

Meet the Reseller News 30 Under 30 Tech Awards 2020 winners
Reseller News Exchange Auckland: Beyond the myths — how partners can master cloud security

Reseller News Exchange Auckland: Beyond the myths — how partners can master cloud security

This exclusive Reseller News Exchange event in Auckland explored the challenges facing the partner community on the cloud security frontier, as well as market trends, customer priorities and how the channel can capitalise on the opportunities available. In association with Arrow, Bitdefender, Exclusive Networks, Fortinet and Palo Alto Networks. Photos by Gino Demeer.

Reseller News Exchange Auckland: Beyond the myths — how partners can master cloud security
Reseller News welcomes industry figures at 2020 Hall of Fame lunch

Reseller News welcomes industry figures at 2020 Hall of Fame lunch

Reseller News welcomed 2019 inductees - Leanne Buer, Ross Jenkins and Terry Dunn - to the fourth running of the Reseller News Hall of Fame lunch, held at the French Cafe in Auckland. The inductees discussed the changing face of the IT channel ecosystem in New Zealand and what it means to be a Reseller News Hall of Fame inductee. Photos by Gino Demeer.

Reseller News welcomes industry figures at 2020 Hall of Fame lunch
Show Comments