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Dell SecureWorks IPO: Weaker Than Expected?

Dell’s IPO of SecureWorks Corp., a managed security service provider, apparently isn’t performing as well as the hardware giant had hoped. SecureWorks stock (symbol: SCWX) is expected to start trading on the Nasdaq stock market on Friday, April 21. But investor interest ahead of the public IPO apparently wasn’t as strong as expected.

According to Bloomberg:

The company sold 8 million Class A shares for $14 apiece, said the person, who asked not to be identified because the matter is private. SecureWorks had initially marketed 9 million shares for $15.50 to $17.50 each. The shares will start trading Friday, listed on the Nasdaq Stock Market under the symbol SCWX.”

The Bigger Dell and IT Industry Pictures

The SecureWorks IPO is important for at least three reasons:

1. Tech IPOs: On a macroeconomic front, it’s the year’s first first technology IPO — and some folks were hoping SecureWorks would somewhat energize the tepid IPO market.

2. Managed Security Services: SecureWorks is a managed security service provider — a potentially hot niche that could fuel additional IPOs or high-valuation M&A down the road. Other key players include Alert Logic, a privately held security as a service provider that lifted GAAP revenues to $23.7 million in Q1 2016 vs Q1 2015, the company said today.

3. Dell’s Buyout of EMC: Dell has been selling off or reorganizing a range of assets ahead of the company’s $67 billion buyout of EMC. That deal is expected to be completed between May and October 2016. Dell has already sold off its IT services business (the former Perot Systems) to NTT. Additional asset sales could include Dell selling SonicWall and/or Quest Software, and EMC selling Documentum, multiple reports have suggested.

Dell-EMC Deal Appears Healthy

Despite all those variables, Dell’s buyout 0f EMC appears on track. EMC delivered slightly weaker than expected quarterly results this week. But EMC sibling VMware delivered surprisingly strong revenues, fueled by growing sales of NSX (network virtualization) and VSAN (virtual SAN) technology.

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