VMware shares are hot now as Dell Deal Looks Close

Corrections and clarifications: An earlier version of this column gave the wrong date for shareholders to vote on the proposed sale of Dell EMC.

EMC said it is close to finalizing its sale to Dell, and this has contributed to the actions of your business VMware red hot.

VMware shares rose 14% to $ 58.53 on Wednesday after the software maker said virtual storage sales in the first quarter were slightly better than Wall Street expectations. He also issued a set of revenue for the second quarter traffic forecast can also exceed analysts' estimates slightly.

These estimates were reduced in January after VMWare has reduced its forecast for sales growth in 2016.
VMware also benefited after the leaders said the company would start once repurchasing EMC (EMC) to shareholders voting on the transaction Dell. The proposed sale will allow private EMC VMware, but as a unit traded holding company Michael Dell, Denali.

"We are actively working on finalizing Securities (necessary documents) so we can get to a vote of shareholders as soon as possible," said CEO Joseph Tucci EMC on the results of the first quarter call the company on Wednesday.

Tucci said the deal has cleared regulatory barriers in all countries except China and reiterated that the deal will close in the second or third trimester.

EMC, which held about 80% of the shares of VMWare when the agreement was announced in October, said the vote on the agreement in place take place at an extraordinary shareholders' meeting, a date has not been set.

Reaffirming the Dell agreement will close to its original programming, EMC helped ease investor concerns about the deal that keeps their actions and below the sticker price announced $ 33.15 per share. For a few weeks, even below $ 24.05 they languished a cash price of Dell stock has agreed to pay. EMC shares also rose Wednesday finishing 3.2% higher than $ 26.37.

These concerns include how the Denali debt by this LBO will be taken.

VMware shares have been even worse since the huge bet Michael Dell news became public. Since Dell will pay by the transaction monitoring VMware securities that will dilute its shareholders, investors find themselves on the wrong end of a classic arbitrage transaction (VMware, EMC buy) side, we he warned the players there are about seven months.

While trade was still a generator of money in November, allegedly ARB offices are temporary and seems to reproduce.

Since last fall, Michael Dell has raised more money to help pay for EMC. These deals include the sale of enterprise IT services Dell NTT Data Corp. Japan for $ 3 million dollars on March 28.
Dell is also in talks to sell more of its software units, according to Bloomberg News, including Documentum and SonicWall, aiming to raise billions more.

The moves have encouraged investors disheartened VMware above, who have seen their shares lose 45% of its value between October 7 and the report of disappointing first quarter of VMware in late January.
disgruntled shareholders were able to stop the creation of a new unit of EMC that would have added more complexity and risk for investors VMware.

This movement, which have joined the cloud computing units EMC and VMware and put the cost to the development of combination products in the income statement of VMware, was announced but quickly cleaned.

With the news of the last 24 hours, the pressure of arbitration in sales of VMware seems to be declining rapidly or already completed.

VMware shares may open up new increases. In the longer term, however, investors holding shares weighing should be aware that analysts have reduced their growth forecasts for almost half the company three months ago.
And while future repurchases shares of VMware mitigate the effect on future follow-up actions will dilute current shareholders even more.

EMC shares are also seen as a commercial purchase by the end of May, the case of Dell, unless unforeseen panic or other bad news.

The population increase Wednesday came even after it reported sales fell 2% over the previous year, as fears faded in the transaction.

Because of its participation in the structure of the transaction VMware and Dell, any increase in the shares of VMware also goose the value of EMC between now and when taken private.

So, after suffering for months in the hands of the sellers of arbitration, the best way to make money on VMware in the near future is to be long and not too short.