With a decrease in revenue and the lack of ability to meet its bottom line or to make profit, Dell Technologies is currently looking at different options in order to raise capital.
Based on the substantial debt amount of US$52.5 billion, analysts are suggesting that the company should go public to reduce the amount. They purchased 80% of VMware in 2015 for US$67 billion but still owes US$46 billion in debt from that purchase.
There have been whispers that they are considering a reverse merger with VMware, the company they acquired EMC Corporation from. A reverse merger would mean that VMware, the smaller company, would buy Dell, reportedly for more than the US$67 billion.
A reverse merger would mean that they would not need to go public as VMware is already traded on the New York Stock Exchange Market as an independent company.
After they purchased VMware, its debt amount was US$57. 4 billion. Therefore in order to reduce that amount, Dell liquidated several assets. Dell Services was sold to NTT Data Inc, a Japanese telecoms company, for US$3.05 billion in March 2016. By June 2016, Dell sold Dell Software unit to Partners Management LCC, a private company in Francisco, for US$2.4 billion.
Additionally, in September of the same year, the company sold its Enterprise Content Division for US$1.62 billion just less than a week after it purchased VMware. With these sales, Dell paid off US$5.3 billion to reduce its debt with a further US$1.2 billion paid since the start of 2018.
Rumour also has it that Dell may very well purchase the remaining 20% of VMware but how feasible would that be? Wouldn’t they still be in debt? Analysts and investors are still waiting to see what they will do in the coming months to move from in the red to black.
But with a track record of losses and bold but risky moves made by Dell’s CEO, Michael Dell, would you buy Dell’s IPO?
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