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Dell Considering IPO, or Buying All of VMware – Reports

Mitch Wagner

Cloud infrastructure leader Dell is considering an IPO, several years after the company went private. It may also buy the remaining parts of VMware that it does not already own, according to published reports.

The previously public company, now valued at more than $50 billion, went private in 2013 in a leveraged buyout valued at roughly $25 billion. The buyers were company founder Michael Dell and investment firm Silver Lake. Dell bought EMC for $67 billion in the largest-ever technology takeover. EMC owned 80% of VMware Inc. (NYSE: VMW) when Dell purchased EMC.

The deal added significantly to Dell EMC 's balance sheet, with $51 billion, according to the Wall Street Journal, reporting on the news of the latest deal under consideration. Dell pays about $2 billion in annual interest on that debt, making it one of the most heavily indebted companies that will be hurt by the tax bill Congress passed at the end of last year, the Journal says.

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The EMC deal failed to deliver cost savings and performance Dell projected, and higher component costs and a tough data storage market have eroded Dell's margins, according to Reuters. Dell is "reviewing a list of several possible acquisition targets" and the "review is at its very early stages and no deal is certain," Reuters says.

Dell may sell or IPO Pivotal , which provides cloud software and services, Reuters says.

Cisco Systems Inc. (Nasdaq: CSCO) and Dell EMC are the market leading infrastructure providers in both the public and private cloud markets, according to a report this month from Synergy Research Group Inc. (See Cloud Market Soared to $180B in Revenue in 2017 – Study.)

Dell EMC dominates the private cloud infrastructure market, Synergy said in September. (See Cisco, HPE, Dell EMC Fighting for Cloud Infrastructure Dominance.)

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