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Dell may be selling off VMware stock

(Image credit: Shutterstock / N.Z.Photography)

Dell is considering selling off its stake in VMWare in a bid to boost its share performance, according to a report from The Wall Street Journal.

Citing people familiar with the matter, the publication reported that Dell will either sell its stake in the company (valued at approximately $50 billion) or snap up the remaining shares (it currently owns 81 percent).

The company is working with external advisers on the matter, setting up working groups tasked with exploring the various possibilities.

The problem, for Dell, appears to be the disparity between its own market value (approximately $36 billion) and that of VMware. According to the report, the market is assigning “little to no value” to Dell’s core business.

The company is also $48 billion in debt, which could be alleviated with the sale of its stake in VMware.

There is also a good chance Dell neither sells its stake nor purchases more VMware shares. In any case, no deal will occur before next year because of a law stipulating that Dell needs to have operated VMware for five years in order to spin off its stake in the company tax-free. September 2021 marks five years since Dell merged with EMC, which acquired VMware in 2004.