Yesterday marked the closure of the $67 billion takeover of EMC Corp by Dell Inc. The new company named Dell Technologies now holds approximately 80% of VMware shares, which were earlier held by its parent company EMC. The remaining 20% of the shares are held by the shareholders and will continue to trade for now.
Management Changes
VMware yesterday announced that Michael S. Dell will take up the role of Chairman of VMware’s board of directors, replacing Joseph M. Tucci who held the position for the last nine years. Another change in management is the appointment of Egon Durban to the company’s board of directors in place of John R. Egan.
The news, however, failed to cheer investors as shares dipped 0.9% in yesterday’s trading session.
In fact, investor sentiments have remained muted since the news of the EMC-Dell merger first appeared in Oct 2015.
Should Investors Worry?
Per the deal, Dell created a tracking stock from 53% of the value of total VMware shares. The tracking stock reflects the performance of the trading stock. This entitles EMC shareholders to economic interest in the trading stock but they do not own them (that is no voting rights or dividends).
Through the EMC acquisition, Dell got a significant control of VMware (at quite a discounted price). As a result, investors are jittery regarding the valuation of the company. Moreover, it also gave Dell an ability to raise its stake further in the future.
Nonetheless, for now, VMware appears to be on a robust growth trajectory. The company does have a broad product portfolio,which places it in a unique position in the virtualization space with a robust market share (two-third of the total server virtualization market).
Zacks Rank
Currently, VMware has a Zacks Rank #2 (Buy). Better-ranked stocks in the tech space include Analog Devices, Inc. (ADI - Free Report) , LinkedIn Corporation and Facebook Inc. . All three carry a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Interested in IPOs? Check out the special edition of Zacks Friday Finish Line below, where Editor Maddy Johnson and Content Writer Ryan McQueeney interview Kathleen Smith of Renaissance Capital about the IPO market in 2016 (see part two here).
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Yesterday marked the closure of the $67 billion takeover of EMC Corp by Dell Inc. The new company named Dell Technologies now holds approximately 80% of VMware shares, which were earlier held by its parent company EMC. The remaining 20% of the shares are held by the shareholders and will continue to trade for now.
Management Changes
VMware yesterday announced that Michael S. Dell will take up the role of Chairman of VMware’s board of directors, replacing Joseph M. Tucci who held the position for the last nine years. Another change in management is the appointment of Egon Durban to the company’s board of directors in place of John R. Egan.
The news, however, failed to cheer investors as shares dipped 0.9% in yesterday’s trading session.
In fact, investor sentiments have remained muted since the news of the EMC-Dell merger first appeared in Oct 2015.
Should Investors Worry?
Per the deal, Dell created a tracking stock from 53% of the value of total VMware shares. The tracking stock reflects the performance of the trading stock. This entitles EMC shareholders to economic interest in the trading stock but they do not own them (that is no voting rights or dividends).
Through the EMC acquisition, Dell got a significant control of VMware (at quite a discounted price). As a result, investors are jittery regarding the valuation of the company. Moreover, it also gave Dell an ability to raise its stake further in the future.
Nonetheless, for now, VMware appears to be on a robust growth trajectory. The company does have a broad product portfolio,which places it in a unique position in the virtualization space with a robust market share (two-third of the total server virtualization market).
Zacks Rank
Currently, VMware has a Zacks Rank #2 (Buy). Better-ranked stocks in the tech space include Analog Devices, Inc. (ADI - Free Report) , LinkedIn Corporation and Facebook Inc. . All three carry a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Interested in IPOs? Check out the special edition of Zacks Friday Finish Line below, where Editor Maddy Johnson and Content Writer Ryan McQueeney interview Kathleen Smith of Renaissance Capital about the IPO market in 2016 (see part two here).
Confidential from Zacks
Beyond this Analyst Blog, would you like to see Zacks' best recommendations that are not available to the public? Our Executive VP, Steve Reitmeister, knows when key trades are about to be triggered and which of our experts has the hottest hand. Click to see them now>>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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