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Going public again would swell profits by two-thirds, claims Dell

Shhh, little VMware, go back to sleep

Dell is wooing investors with the promise of profits leaping by more than two-thirds if they back Big Mickey D's plans to take the eponymous tech group public again.

According to Dell's latest S-4 filing with the American Securities and Exchange Commission, by 2023 Dell reckons it will be generating revenues between $91bn and $95bn and operating income (EBITDA) of $9.1bn – a 68.5 per cent increase over its reported $5.9bn EBITDA for fiscal year 2019.

In effect what Dell wants to achieve is a share swap that will see VMware investors acquire holdings in Dell Technologies. Dell is trying to tempt investors with $109 per share, an offer they appear slow to jump on so far.

Dell's projections exclude VMware, on the basis that its beancounters want to persuade investors to drop VMware's stocks for Dell's come the IPO of Michael's firm. This caused some internal friction between VMware and Dell, its corporate parent, according to a very lengthy timeline disclosed in the S-4 filing.

Michael Dell's biz owns 82 per cent of VMware thanks to its 2016 buyout of EMC, and the resulting acquisition of EMC's shareholding in the virtualization outfit. Dell itself went public on its plans to go public again a few weeks ago.

Dell is still a work in progress as it seeks to dominate all data


Goldman Sachs, which was advising Dell on its machinations, clashed repeatedly with VMware's financial advisors from Lazard over the projected valuations. While both companies' published projections are relatively close – within around $100m of each other on a scale measured in billions – the two nevertheless squabbled over "significant differences in the financial analyses".

With Dell seemingly having shelved its one-time plan to merge with VMware, following phone calls between VMware chief Pat Gelsinger and Big Mickey D, or do something weird like have VMware buy it out as a means of getting back onto the public markets, answers as to why Dell is doing all this are still thin on the ground. As we opined a few weeks ago, it appears to be about domination of data.

The FT reported that "several hedge funds who own the tracking stock are sceptical" of the proposals.

The move to go public is a far cry from the noises that Mike D was making five years ago when he said it was preferable that he remove the company from th glare of Wall Street analysts and investors. ®

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