Summary
VMware is a cloud infrastructure and business mobility provisioning company. They became the leader in being able to segment server space into multiple “VMs” that can support different operating systems. Cloud Infrastructure is continuing to grow which will only help VMware prospects moving forward as more businesses move to this solution. The biggest risk for an investor was that Dell Technologies was a majority stake of 81% of the company. They have recently announced a spinoff that will allow VMware to get out from underneath Dell which will allow them to get out from underneath Dell.
VMware is in a Growing Industry
Cloud Computing will continue to grow as business gets acclimated to the many advantages of it. This will only help VMware as they continue to try and expand their business. As the go-to solution in the industry, they will see the benefits of this which will result an increase in sales over time.
The Spinoff from Dell and what it means
Dell is a majority owner of VMware with a 81% stake in the company. They are planning on doing a stock spinoff with Dell which will allow them to become an independent company. The transaction is supposed to be finalized in the fourth quarter of 2021. With being affiliated with Dell, VMware is more restricted to working with other manufacturers. According to VMware CEO Pat Gelsinger, being independent will allow him with more hardware manufacturers giving them more sales opportunities of their products.
VMware has a P/E ratio lower than many other Tech Stocks
As many stocks accelerated in value after march, VMware largely didn’t see the same increases that other tech stocks saw over the same time period. VMware is trading is trading 30 times Earnings which is much cheaper than many of its counterparts. Its cheaper valuation makes it an attractive option for investors to consider as they continue to look to grow in a market fueled by technology.