Dell Technologies is considering spinning off its majority stake in VMware, potentially in an attempt to increase its market value, according to a Wall Street Journal report.
The report comes as technologies from data center giant Dell and virtualization leader VMware have been more tightly integrated than ever, including in solutions such as the VxRail hyperconverged infrastructure system and the Dell Technologies Cloud suite.
VMware declined to comment on Tuesday. Dell Technologies did not immediately respond to a request for comment.
Dell's 81-percent stake in VMware has been valued at $50 billion, but Dell's own market capitalization stood at $36 billion prior to the report Tuesday--suggesting that the market is “assigning little or no value” to Dell’s data center and PC businesses, the Journal reported.
The report characterized the process as in the early stages, with working groups formed only recently to examine the options around the VMware stake. The Journal indicated that Dell still may not pursue a spinoff at all--and also added that any decision is "unlikely" before 2021.
Dell Technologies’ stock price soared 18 percent, to $57.80 a share, in after-market trading Tuesday. VMware’s stock price was up 9 percent to $162.80 a share.
In a recent interview with CRN, Michael Dell pointed to major traction for the joint technology innovation between VMware and Dell Technologies.
"If you look at what we did with VxRail and VxRack, just as an interesting example, those two combined have generated more than $4.5 billion in orders since inception. We’ve actually been exceeding the ambitious targets that we set for ourselves there. Those solutions continue to grow and get better," Dell said. "Now we have those with VMware Cloud Foundation, and we continue to enhance the combined solutions with the Dell Technologies Cloud, with Unified Workspace, with our SmartFabric Director—the innovation engine is on high."