Analyst Note| Mark Cash |
Narrow-moat VMware provided an update on its upcoming spin-off from no-moat Dell Technologies. It will pay an $11.5 billion special dividend to all VMware shareholders with a record date of Oct. 29 and payment date of Nov. 1. The update does not change our fair value estimate of $202 for now, although we anticipate lowering our valuation by the amount of the special dividend per share when it is paid out. The actual payment amount will be known after the market closes Oct. 29 (we anticipate it will be around $27.40 per share); VMware’s ex-dividend trading date is Nov. 2. We view VMware's shares as undervalued and believe the company can catalyze growth as a stand-alone organization and remain a crucial layer for developers, infrastructure, and security teams in a cloud-first world.