“We’ve heard that they have a long-term and broad partnership framework in place that will minimize disruption for customers and partners. We’re hearing that the framework is going to be in place for a minimum of five years upfront,” said Rick Gouin, chief technology officer at Winslow Technology Group, a Waltham, Mass.-based Dell Titanium partner. “So we expect that through the agreement, or framework, we’re going to be able to continue to leverage the resources we’re used to, transact the business we’re used to, with pretty minimal disruption. So we think at least for these first five years, there’ll be not much impact us from a business perspective.”
Dell’s goal with the spin-off is to simplify its capital structures, help Dell achieve investment-grade credit rating and provide Dell with funding to reduce its core debt stemming from its US$67 billion acquisition of EMC in 2016.
As part of the deal, VMware will pay a special cash dividend of between US$11.5 billion to US$12 billion to the company’s shareholders, which will include around US$9.5 billion for Dell Technologies. Dell is on target to pay down US$16 billion of its debt this year that will likely give the company an investment-grade rating.
“I haven’t seen any difference in behavior, nor do I notice anything from VMware’s product execution strategy falling off with the number of changes that have occurred,” said Sentinel’s Keblusek. “So far, it’s been business as usually. VMware’s really been an industry rock star and has been doing a great job.”
Both Dell and VMware have been witnessing strong sales growth.
For its first fiscal quarter 2022, VMware generated a total of US$3 billion in sales, an increase of 9 percent year over year. Dell generated record first-quarter 2002 revenues, generating US$24.5 billion in total sales, up 12 percent year over year.
Dell stock is up more than 34 percent this year to US$97.44, while VMware stock has risen 13 percent to 13 percent to US$156.75 as of Wednesday.