Dell and VMware earnings send stocks in different directions
Ahead of a planned spinoff of Dell Technologies Inc.’s stake in VMware Inc., both companies reported earnings beats Thursday, but only one saw its stock gain in response.
Dell DELL,
VMware VMW,
Shares of Dell gained more than 1% in after-hours trading Thursday, while VMware shares fell more than 1%.
Dell acquired an 81% ownership stake in VMware through its $67 billion acquisition of EMC Corp., which closed in 2016. Dell announced its long-awaited decision to spin off that stake last month, though it must wait for the five-year anniversary of the deal closing this fall to make it a tax-free transaction.
For more: VMware to finally come into its own in Dell spinoff, but strategic cloud remains
Dell has benefited from a pandemic-influenced rise in personal-computer sales. The company Thursday reported record sales from its PC division of $13.3 billion, with $3.5 billion attributed to consumer purchases and $9.8 billion to corporate clients. Analysts on average expected sales from the PC division to total $12.7 billion, with consumer sales of $2.94 billion and corporate sales of $9.84 billion, according to FactSet.
Dell’s other major segment is the core EMC business of servers, networking and storage. Dell reported sales of $7.9 billion in that division, referred to as the “Infrastructure Solutions Group,” while analysts on average were projecting $7.53 billion.
Dell stock received a boost from the announcement of VMware spinoff plans, gaining 22.6% in the past three months for a 118.1% increase in the past year. VMware has gained 16.4% in the past three months, but only 15.5% in the past year. The S&P 500 index SPX,