Author Topic: VMW - VMWare  (Read 7893 times)

given2invest

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Re: VMW - VMWare
« Reply #10 on: August 29, 2019, 09:59:21 AM »
And when I say 40-45% undervalued I mean it has to essentially *double* to get to fair value, today, and that's with a distressed VMW stock price that should be materially higher.


oddballstocks

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Re: VMW - VMWare
« Reply #11 on: August 29, 2019, 11:43:51 AM »
How in the world do you get that they have a monopoly?

VMWare has 64% of the market with Hyper-V and KVM/Xen taking up the other 36%.

VMWare is a nice product, but Hyper-V is as well.  You get slammed on pricing if you run Windows on VMWare.

There's also QEMU and KVM, two Linux platforms that are really popular with companies that are latching onto the SDN notion.

Kubernetes isn't really a competitor.  Those containers have to run on bare metal somewhere, and most likely it's a hypervisor on bare metal.

Full disclosure, my company uses Hyper-V.  Considered VMWare but their cost scales quickly whereas with Windows it's linear.


Here's an example.  You want to run four instances of Windows on two servers.  Each server is dual processor.

vSphere license ($995 x4 = $3,980) You need to license each socket
vSphere support ($323 x4 = $1,292)
vCenter to manage it ($1,535)
Windows Server licenses ($900 x 2)

Total= $8,607  I selected the cheapest options possible.  If you jump to vCenter standard add another $5k, or vSphere enterprise another $2,500 per processor socket.

If you run Linux you save $1,800.

To do the same setup with Hyper-V is $1,800.
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Gordon Gecko

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Re: VMW - VMWare
« Reply #12 on: August 29, 2019, 01:20:10 PM »
4% growth ex-China

**shrugs**

alwaysinvert

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Re: VMW - VMWare
« Reply #13 on: August 29, 2019, 01:28:41 PM »
DELL is *by far* my largest position.

I will just opine in one way:   I have confirmed w/ DELL IR that the debt at HoldCo level is NOT pledged to VMW stake, besides a small margin loan.  Thus, even if you think DELL CORE is worthless, you can buy DELL and get VMW at a 25% discount.  They can spin it out tax free in Sept 2021. 

Of course, DELL CORE not worthless and worth much more than it's debt.  It throws off 3-4b of FCF a year.  I conservatively value it at ~50b or 6x EV/EBITDA.  Actual net debt is 33b or so (can't include financing debt DFS) leaving 17b in equity value or >$20 a share. 

Put all together, DELL today is 40-45% undervalued *just* using today's VMW price, which I think is also undervalued.  And you get to own it side by side with two of the greatest investors of all time, MSD and Silver Lake.

I guess the question is what avenues of screwing you over do they have this time?

given2invest

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Re: VMW - VMWare
« Reply #14 on: August 29, 2019, 02:11:10 PM »
4% growth ex-China

**shrugs**

lol.  you are getting paid to own something that generates billions in FCF after taking out the VMW stake.   

GETTING PAID

given2invest

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Re: VMW - VMWare
« Reply #15 on: August 29, 2019, 05:22:23 PM »
that shitty DELL that nobody wants to be paid to own sure put up some nice #'s tonight

RuleNumberOne

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Re: VMW - VMWare
« Reply #16 on: August 30, 2019, 08:38:25 AM »
The ex-VMW revenue was flat with a 10% operating margin.

Doesn't take much of a revenue decline in the ex-VMW revenue for the ex-VMW operating income to get close to zero. Servers and networking revenue was down 12%. Dell bought EMC just in time.

VMW operating margin = 31% (wide moat).

given2invest

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Re: VMW - VMWare
« Reply #17 on: August 30, 2019, 09:14:43 AM »
You make no sense.  The gross margins are like 30%.  It's not a biz with tremendous operating leverage.  They can adjust the overhead for lower sales.  There are plenty of tech hardware businesses that have less than 90b in sales and are profitable!

Gordon Gecko

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Re: VMW - VMWare
« Reply #18 on: August 30, 2019, 09:32:56 AM »


lol.  you are getting paid to own something that generates billions in FCF after taking out the VMW stake.   

GETTING PAID

I'm on your team here. I was comparing that to the -7% CAGR discussed before...

scorpioncapital

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Re: VMW - VMWare
« Reply #19 on: September 10, 2019, 06:49:59 AM »
Why would dell spin off vmware (which would be a blessing for shareholders of dell) instead of sell small pieces of the shares to the public to increase the float and thereby favouring dell shareholders with incoming cash but not allowing them to cash out , so to speak, of dell stock ? I see small drip drip sales much more likely as they need cash for cash flow management. As such the benefit is only if you remain a Dell shareholder. Anyway to handicap if they will do a wholesale spinoff vs just sell the stake down slowly ?