After years of controlling stake in another company, VMware Inc. will finally divest its parent company – now Dell Technologies. However, the deal will not solve the underlying problems for the virtualization software maker.
Investors seemed to see it that way too and sent shares in Dell DELL,
Wednesday after-hours trading increased over 8% as VMware VMW,
pinned to less than 1%.
“Compare how Dell stock is reacting and VMware shareholders are watching the champagne party from afar,” said Dan Ives, an analyst at Wedbush Securities. “VMware is removing an overhang, but it does not change the fundamental strategic overhang that continues to plague the stock, and they are splitting off at a time when their long-time leader has completed an exit phase for Intel.” (Pat Gelsinger, CEO of VMware, left earlier this year to lead Intel.)
Also read: Can Intel’s boy be surprised to pull a Steve …