When Dell bought EMC in 2016 for $ 67 billion, it created a complicated consortium of interconnected organizations. Some, like VMware and Pivotal, operate as completely separate companies. They have their own boards, can acquire companies and are publicly traded on the stock market. Still, they work closely within Dell and collaborate wherever it makes sense. When Pivotal's stock price plunged recently, VMware saved the day when it bought the shaky company for $ 2.7 billion yesterday.
Pivotal went public last year and struggled sometimes, but in June the wheels began to turn off after a poor quarterly income report. The company had what MarketWatch aptly called "a train wreck in a neighborhood."
How bad was that? So bad that the stock price was down 42% the day after it reported earnings. Although the quarter itself was not so bad, with revenue up year over year, the guidance was a different story. The company cut its revenue guidance in 2020 by $ 40- $ 50 million, and the guidance it provided for the upcoming 2Q 1
The stock price plunged from a high of $ 21.44 on May 30 to a low of $ 8.30 on August 14. The company's market capital fell during the same period, falling from $ 5,828 billion on May 30 to $ 2,257 billion on August 14. That's when VMware admitted that it was thinking of buying it the company is struggling.