Tech stock under pressure: Dell Technologies Inc (NYSE: DVMT)

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Dell Technologies Inc (NYSE: DVMT) stock plunged 21.64% on December 21st, 2018 (Source: Google finance) but slightly recovered over 0.8% on December 26th, 2018.

Shareholders owning the current Class V shares had until just after Friday’s close to elect whether to accept $120 per share in cash or a certain amount of to-be-issued Class C common stock in exchange for their current stock. Although nearly all shareholders elected to get cash, the deal was subject to a maximum cash component of about 59%. That means that shareholders will be forced to accept a pro-rata mix of cash and stock, and the shares trading on the exchange today won’t be able to elect cash at all, reducing their value substantially compared to what they were worth on Friday. According to the deal’s exchange ratio, the implied value of Dell shares would be $44.56, compared with Friday’s implied price of $43.38, according to data the company has released. The steep fall was largely expected, according to some market participants, as the stock can now only be exchanged for shares in the soon-to-be-public Dell.

VMware revenue for the third quarter was $2.2 billion, up 15 percent, with operating income of $768 million and 34.5 percent of revenue. The company continues to see revenue synergies through the collaboration across the Dell Technologies family of businesses. Earlier this month at VMworld Europe, Dell Technologies announced the VxBlock System 1000 as part of the Dell EMC Cloud Marketplace with new automation software and integration with VMware vRealize Suite, revolutionizing Converged Infrastructure operations by enabling administrators to expand resources in minutes versus hours. For the industry-leading hyper-converged infrastructure solution VxRail, the company announced an integrated cloud platform with support for VMware Cloud Foundation and fully automated network configuration with Dell EMC Networking SmartFabric Services.

For the third quarter, revenue was $22.5 billion, up 15 percent, and non-GAAP revenue was $22.7 billion, up 14 percent from the prior period. During the third quarter, the company generated a GAAP operating loss of $356 million, with a non-GAAP operating income of $2.1 billion, down 2 percent. Cash flow from operations was approximately $833 million. The company ended the third quarter with a cash and investments balance of $20.4 billion. During the quarter, Dell Technologies paid down approximately $1.3 billion of core debt2. Within the past two years, the company has paid down approximately $14.4 billion in gross debt, excluding Dell Financial Services related and subsidiary debt.

 

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