Dell Technologies Inc. (DELL) shares soared on news of the spin-off of approximately 81 % of VMware shares. It can help Dell push its business forward, as additional funds will be available for development.
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Shares of Dell Technologies Inc. (DELL) traded at $98.76 in after-market trading at the last check. During Thursday’s session, DELL’s stock closed at $98.92, a gain of 6.71%. Throughout the past 50 days, the stock volume was 13.46 million shares, which was higher than the average daily volume of 2.82 million shares. Over the past 12 months, DELL shares have risen by 144.55%, and they have increased by 6.85% in the past week. The stock gained 388.87% in the last three months, while in the previous six months, it increased 40.29%. Furthermore, the Dell stock has a market cap of $74.40 billion and has 750.00 million shares outstanding.
Although it has been known for quite a while that Dell would spin off VMware, it’s important to note that two separate companies will remain close to one another. The VMware and Dell businesses are complementary: VMware makes enterprise cloud servers, and Dell makes server hardware.
VMware President Michael Dell will be the new CEO of Dell after the split. Upon completion, VMware will pay up to $12 billion to the shareholders of each company. Dell holds an 81 % stake in VMware to receive up to a total of $ 9.7 billion. Dell will use this money to pay off its debt. Hybrid clouds, telecommunications, 5G networks are also among the fast-growing areas that will see investments.
Analyst Catherine Huberty of Morgan Stanley, who recommends DELL shares as part of a buy recommendation, set a target price of 107 for its spin-off. The analyst believes that there is a trend for consumers to switch from PCs to laptops, which have a shorter replacement cycle with an average of 1.5 years. Additionally, the number of personal computers is growing, which is also a positive factor for Dell.