Dell Stock Edges Up as VMware Spin-Off Completed – TheStreet

Dell Technologies  (DELL) – Get Dell Technologies Inc Class C Report and VMware  (VMW) – Get VMware, Inc. Class A Report are going separate ways, the two companies said as they announced the completion the spin-off of VMware from the computer giant.
Shares of the Round Rock, Tex.-based Dell closed 3.2% lower at $54.61 Tuesday. VMware, which is based in Palo Alto, Calif., closed up 7.9% to $134.87.
The spin-off includes an $11.5 billion special cash dividend, resulting in a $27.40 a share dividend payment on November 1 to all VMware stockholders as the close of business on October 29.
Dell announced plans in April to spin off its 81% stake in VMWare in a deal to create two standalone companies. Dell acquired its stake in VMWare in 2015 as part of its acquisition of EMC.
"Today’s move will strengthen our mission to be the Switzerland of the cloud industry, uniquely positioned to provide our customers with the best combination of options as we grow our robust ecosystem of partners," VMware CEO Raghu Raghuram said in a blog post.
Barclays analyst Tim Long reinstated coverage of Dell on Tuesday with an equal weight rating and $59 price target post the VMware spinoff, according to the Fly.
Dell has emerged with a simpler structure and an improved balance sheet, Long tells investors in a research note. However, longer term, the analyst is concerned that secular headwinds across Dell's end markets will weigh on the shares.
On Monday, Deutsche Bank analyst Brad Zelnick initiated coverage of VMware with a hold rating and $170 price target.
Zelnick said prefers to stay on the sidelines until gaining more comfort with the company's subscription model transition. 
The combination of an "existential debate" along with a business model transition "creates a difficult equity narrative," Zelnick said.

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