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Dell IPO Plan Emerging?

A Dell Technologies IPO plan could be in the making — and the revised strategy may no longer include acquiring a tracking stock and a big dividend payout.

Indeed, Dell apparently is speaking with investment bankers this week about a more traditional IPO (initial public offering), according to multiple reports.

The discussions may indicate that Dell is scrapping a plan to acquire its publicly traded DVMT tracking stock and pay a big dividend to those shareholders. Critics of that proposed deal include Elliott Management Corp., Canyon Capital Advisors LLC and activist investor Carl Icahn, Reuters notes.

Dell and VMware: No Reverse Merger

Dell earlier this year also explored a reverse merger with VMware. Dell owns a majority stake in the virtualization company, but VMware shareholders pushed back against Dell’s exploratory reverse merger plans — fearing the hardware giant would derail the software company’s fast-growing network, storage and software defined data center businesses.

In the latest move, Dell plans to interview several banks for underwriting roles in an IPO this week, according to The Wall Street Journal. As a result, it has postponed by about a week a roadshow to sell the takeover deal that was to begin this week, the report said.

Dell Revenues, Business Momentum Accelerates

Meanwhile, Dell’s business is surprisingly strong. In its Q2 of fiscal 2019:

  • Revenue rose 18 percent to $22.9 billion.
  • Solutions Group revenue was $9.2 billion, a 24 percent increase. Storage ($4.2 billion, up 13 percent), servers and networking ($5.1 billion, up 34 percent) all showed momentum.
  • Client Solutions Group revenue for the second quarter was $11.1 billion, up 13 percent. Commercial revenue (up 13 percent to $8.1 billion) and Consumer revenue (up 14 percent to $3.0 billion) in the group both showed momentum.

The company is feeling bullish about its business, and raised its financial guidance for the rest of its fiscal year 2019.

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