What happened

Shares of VMware (VMW) climbed 18.4% in November, according to data from S&P Global Market Intelligence, both in response to IBM's (IBM 0.61%) pending acquisition of Red Hat (RHT) and after the cloud computing and software virtualization specialist announced strong fiscal third-quarter 2019 results

On the former, VMware rose early last month after billionaire activist investor Carl Icahn suggested the stock should be worth closer to $300 per share, citing the comparable valuation implied by IBM's $34 billion blockbuster deal to purchase Red Hat. For perspective, Icahn's assertion was a not-so-subtle effort to compel Dell Technologies (NYSE: DVMT) to pay a higher price for shares of its tracking stock -- which is tied to its 81% stake in VMware -- as part of its plan to return to the public markets. 

Man on ladder drawing a yellow line on a brick wall indicating gains


So what

Incidentally, only a few days later Dell raised its offer for each tracking share to $120 (from $109 previously), helping to secure additional shareholder support and leading Icahn to reluctantly abandon his opposition to the deal. 

Still, shares of VMware continued to climb later in the month after the company told investors revenue in its latest quarter had increased 13.4% year over year to $2.2 billion, translating to nearly 27% growth in adjusted earnings per share to $1.56. Both figures easily outpaced consensus estimates, which predicted earnings of $1.50 per share on revenue of $2.17 billion. 

"Q3 was another strong quarter, and we're pleased with our results, which continue to be driven by broad-based strength across our diverse product portfolio and in all three geographies," stated VMware CEO Pat Gelsinger.

Now what

VMware also raised its full fiscal-year guidance to call for revenue of $8.882 billion (up from $8.82 billion before) and for adjusted net income of $6.22 per share (up from $6.14 previously). 

It remains to be seen, then, whether VMware's strong quarter might spur yet another increased offer by Dell Technologies for its tracking stock -- though Dell has currently scheduled a special stockholder meeting for Dec. 11, 2018, to vote on the proposed transaction.

Given its relative outperformance in the meantime, however, I think VMware shareholders should be more than pleased with their company's position today.