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VMware Inc Class A VMW

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VMware's Special Dividend Payment and Spin-Off Expected Nov. 1; Shares Undervalued

Mark Cash Senior Equity Analyst

Analyst Note

| Mark Cash |

Narrow-moat VMware provided an update on its upcoming spin-off from no-moat Dell Technologies. It will pay an $11.5 billion special dividend to all VMware shareholders with a record date of Oct. 29 and payment date of Nov. 1. The update does not change our fair value estimate of $202 for now, although we anticipate lowering our valuation by the amount of the special dividend per share when it is paid out. The actual payment amount will be known after the market closes Oct. 29 (we anticipate it will be around $27.40 per share); VMware’s ex-dividend trading date is Nov. 2. We view VMware's shares as undervalued and believe the company can catalyze growth as a stand-alone organization and remain a crucial layer for developers, infrastructure, and security teams in a cloud-first world.

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Company Profile

Business Description

VMware, a majority-owned subsidiary of Dell, is an industry leader in virtual machines for data center servers and computer desktops. The software provider operates in the three segments of licenses, subscriptions and SaaS, and services. Customers include enterprises utilizing data centers, end-user computing, cloud providers, and software-defined networking. The Palo Alto, California, firm operates and sells on a global scale, with about half its revenue from the United States, through direct sales, distributors, and partnerships.

3401 Hillview Avenue
Palo Alto, CA, 94304
T +1 650 427-5000
Sector Technology
Industry Software - Infrastructure
Most Recent Earnings Jul 31, 2021
Fiscal Year End Jan 29, 2022
Stock Type Aggressive Growth
Employees 34,000