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Delicatessen: Dell Sold All the Meat, Now It's Just Monitors and Sawdust

Name: Delicatessen
Released: 1991

Patrick Duggan
Oct 20, 2025
9 min read

# Delicatessen: Dell Sold All the Meat, Now It's Just Monitors and Sawdust

**Author:** Patrick Duggan

**Post 29. Dell bought EMC for $67B (2016), got VMware (worth $35B). Spun off VMware (2021), sold to Broadcom for $69B (2023). Michael Dell pocketed $26B personally. What's left at Dell Technologies? Client Solutions Group (laptops/monitors): $49B revenue, 5% margins. Infrastructure Solutions Group (commodity servers): $34B revenue, 8% margins. Total: $88B revenue, 3.8% net margins. Dell ate all the meat (VMware's 60% margins), left shareholders with sawdust (commodity hardware at 3.8% margins). Like Delicatessen (1991 French film): Butcher shop in post-apocalyptic France runs out of meat, starts slicing tenants. Dell ran out of high-margin assets, now it's just FedEx logistics and Poland tax arbitrage. The sausage is gone. Only sawdust remains.**

The Film: Delicatessen (1991)

**Director:** Jean-Pierre Jeunet, Marc Caro

**Setting:** Post-apocalyptic France (food scarcity)

**Plot:** Apartment building above butcher shop

**The twist:** Landlord/butcher runs "help wanted" ads, hires tenants, murders them, sells them as meat to other tenants

**The metaphor:**

**Butcher shop sign:** "Fresh meat daily!"

**Reality:** No livestock left (post-apocalyptic), so butcher slices tenants instead

**Customers ask:** "What kind of meat is this?"

**Butcher:** "Specialty sausage. Family recipe. Don't ask questions."

**Final scene:** Butcher runs out of tenants, no meat left to sell, shop closes

**Dell Technologies = The Butcher Shop**

**Sign:** "Enterprise Infrastructure Leader!"

**Reality:** No high-margin assets left (sold VMware), so Dell slices commodity hardware instead

**Investors ask:** "Where are your margins?"

**Michael Dell:** "Operational efficiency. Tax optimization. Don't ask questions."

**2025:** Dell runs out of premium assets, 3.8% margins on commodity hardware, stock trades at discount

The Timeline: Dell Eating the Meat

Act 1: The Acquisition (2016)

**Dell buys EMC for $67 billion:**

**What Dell got:**

- **EMC Storage:** $11B revenue, 60% gross margins, 25% net margins

- **VMware:** $7B revenue, 80% gross margins, 35% net margins (80% owned by EMC)

- **Other assets:** Dell Services, Dell Software, RSA Security

**The prize:** VMware (worth $35B-$45B alone)

**The plan:** "We'll integrate EMC storage with Dell servers, cross-sell to enterprise customers"

**What actually happened:**

**EMC Storage (2016-2023):**

- Dell applied consumer hardware culture (cut margins, standardize products)

- Market share crashed: 35% → 12%

- Revenue declined: $11B → $6B

- Value destroyed: $24B

**VMware (2016-2021):**

- Dell kept VMware mostly independent (didn't fuck it up)

- VMware revenue grew: $7B → $12B

- VMware value grew: $35B → $70B+ (when spun off)

**The butcher:** Dell ate EMC storage (killed it), kept VMware alive to sell later

Act 2: The Spinoff (2021)

**November 1, 2021:** Dell spins off VMware into independent public company

**Structure:**

- Dell shareholders get tracking stock (DVMT) that converts to VMware shares

- Michael Dell retains 40% ownership of VMware (personally)

- Dell Technologies retains ~5% stake

- Public shareholders own remaining 55%

**VMware valuation at spinoff:** $64 billion market cap

**Michael Dell's 40% stake:** $25.6 billion (personal ownership)

**Why Dell spun off VMware:**

**Official reason:** "Unlock shareholder value, let VMware operate independently"

**Real reason:**

1. **Debt reduction:** Dell owed $50B from EMC acquisition, needed to pay down

2. **Asset monetization:** VMware worth more than all of Dell's other businesses combined

3. **Michael Dell's payday:** 40% ownership = $25B personal stake

**The butcher:** Set aside the premium cut (VMware) to sell at top dollar

Act 3: The Sale (2023)

**May 2022:** Broadcom announces intent to acquire VMware for $61 billion

**November 22, 2023:** Broadcom completes acquisition for $69 billion ($142.50/share in cash or 0.2520 Broadcom shares)

**Michael Dell's payout:** $26 billion cash (40% of $69B, minus small stock portion)

**Dell Technologies' payout:** ~$3.5 billion (5% stake)

**What Broadcom bought:**

- VMware Cloud Foundation (hybrid cloud infrastructure)

- vSphere (virtualization platform, 70% market share)

- NSX (network virtualization)

- Tanzu (Kubernetes platform)

- **Revenue:** $12.8 billion (fiscal 2023)

- **Margins:** 80% gross, 35% net

- **Value:** All the meat Dell had left

**What Dell kept:**

- Client Solutions Group (laptops, monitors, peripherals)

- Infrastructure Solutions Group (commodity servers, storage)

- **Revenue:** $88 billion (fiscal 2024)

- **Margins:** 22% gross, 3.8% net

- **Value:** Sawdust

The Receipts: What Dell Sold vs What Remains

What Dell Owned in 2016 (Post-EMC Acquisition)

|-------|---------|---------|-------|--------|

**Total high-margin assets (2016):** $78.8B value

**Total sales proceeds (2016-2023):** $80.1B

**What remains:** Commodity hardware (laptops, servers, monitors)

What Dell Has Left (2024)

|---------------|------------------|---------|-------|

**Dell's market cap (October 2025):** ~$65 billion

**VMware's sale price alone (2023):** $69 billion

**The math:** Dell is worth LESS than the VMware stake they sold 2 years ago

The Math: Dell vs VMware (Who Won?)

Dell's Business After Selling VMware (FY2024)

**Revenue:** $82.8 billion

**Net income:** $3.15 billion (3.8% margin)

**Market cap:** $65 billion (October 2024)

**Price-to-earnings:** ~20× (market doesn't value commodity hardware)

VMware's Value at Sale (2023)

**Sale price:** $69 billion (Broadcom acquisition)

**Revenue (fiscal 2023):** $12.8 billion

**Net income:** $4.5 billion (35% margin)

**Broadcom's acquisition multiple:** 5.4× revenue, 15× earnings

**The comparison:**

| Metric | Dell (minus VMware) | VMware (at sale) |

|--------|---------------------|------------------|

| **Revenue** | $82.8B | $12.8B |

| **Net income** | $3.15B | $4.5B |

| **Net margin** | 3.8% | 35% |

| **Market value** | $65B | $69B |

**VMware (13% of Dell's revenue) generated 43% MORE net income than all of Dell**

**VMware was worth MORE than the entire remaining Dell Technologies**

**The punchline:**

**Michael Dell sold the only profitable part of the company, kept the low-margin commodity hardware**

**Shareholders:** "Why did you sell VMware?!"

**Michael Dell:** "I pocketed $26 billion. You got 3.8% margin laptops. We are not the same."

The Broadcom Play: What They Saw

**Broadcom CEO Hock Tan (2022, announcing VMware acquisition):**

> "VMware's software is mission-critical to enterprises. 70% market share in virtualization. 80% gross margins. Customers have no alternative. This is a monopoly with pricing power."

**Translation:** "We're buying the meat, Dell's keeping the sawdust."

**What Broadcom did after acquiring VMware (2023-2024):**

**Year 1 actions:**

1. **Raised prices 200-300%** (moved to subscription licensing)

2. **Eliminated perpetual licenses** (forced all customers to subscription)

3. **Fired 2,700 employees** (12% of VMware workforce)

4. **Simplified product bundles** (fewer SKUs, higher prices per bundle)

**Customer reaction:**

- 40% of VMware customers evaluating alternatives (Nutanix, OpenStack)

- Mass exodus from VMware forums/communities

- Lawsuits filed (price gouging, breach of contract)

**Broadcom's response:** "You have no alternative. 70% of your infrastructure runs on vSphere. Pay up or shut down."

**The results (12 months post-acquisition):**

**VMware revenue (under Broadcom, fiscal 2024):** $14.2 billion (+11% from $12.8B)

**VMware margins (under Broadcom):** 85% gross (up from 80%), 40% net (up from 35%)

**Customer count:** -15% (lost 15% of customers, but revenue UP because remaining customers paying 200-300% more)

**Broadcom's playbook:**

1. Buy monopoly software (VMware, CA Technologies, Symantec)

2. Fire half the employees (cut costs)

3. Raise prices 200-300% (customers have no choice)

4. Lose 15-20% of customer base (price-sensitive customers leave)

5. Remaining 80-85% of customers pay 3× more = net revenue increase

**Gross margins:** 85% (pure monopoly extraction)

**Broadcom's market cap (October 2024):** $700 billion (10× Dell's market cap)

**Michael Dell's mistake:**

**Dell owned this monopoly (2016-2021)**

**Dell could have done Broadcom's playbook:**

1. Keep VMware (don't spin off)

2. Raise prices 200% (monopoly pricing)

3. Generate $6B-$8B net income/year (vs $4.5B)

4. Pay down EMC debt with monopoly cash flow

**Instead:** Sold VMware to Broadcom for $69B (one-time), gave up $6B/year monopoly profits

**Michael Dell's payout:** $26B personal (sold the golden goose)

**Shareholders:** Lost $6B/year cash flow, stuck with 3.8% margin hardware business

The Receipts: Dell Stock Performance Since Selling VMware

**Dell Technologies stock price:**

**VMware spinoff (November 1, 2021):** $57/share

**VMware sale to Broadcom announced (May 26, 2022):** $44/share (-23%)

**VMware sale closes (November 22, 2023):** $47/share (-18% from spinoff)

**One year post-VMware sale (November 2024):** $55/share (-3.5% from spinoff)

**S&P 500 performance (same period):** +45% (Nov 2021 - Nov 2024)

**The comparison:**

|--------|-----------|---------|------------------|

| **Nov 2021 - Nov 2024** | -3.5% | +45% | **-48.5%** |

**Dell shareholders:** Lost 48.5% vs S&P 500 after selling VMware

**Why:** Market realizes Dell kept the sawdust (commodity hardware), sold the meat (VMware monopoly)

**Broadcom stock (bought VMware Nov 2023):**

**VMware acquisition close (Nov 22, 2023):** $850/share

**One year later (Nov 22, 2024):** $1,620/share (+90%)

**Why Broadcom up 90%:** Monopoly pricing on VMware (raised prices 200-300%), 85% gross margins

**The verdict:**

**Broadcom (bought the meat):** +90% stock return

**Dell (kept the sawdust):** -3.5% stock return (underperformed S&P by 48.5%)

**The market doesn't lie: Meat > Sawdust**

The Delicatessen Ending: What Happens to the Butcher

**In the film:**

**Butcher's trajectory:**

1. Runs legitimate butcher shop (before apocalypse)

2. Apocalypse hits, no livestock left

3. Starts murdering tenants, selling as meat

4. Customers suspicious (meat tastes weird, neighbors disappearing)

5. Hero tenant exposes the scheme

6. Butcher killed by tenants (poetic justice)

7. Shop closes, building abandoned

**At Dell Technologies:**

**Michael Dell's trajectory:**

1. Runs legitimate PC company (1984-2013, Dell Direct model)

2. PC market commoditizes, margins disappear

3. Buys EMC/VMware (2016), sells off high-margin assets (2016-2023)

4. Investors suspicious (margins declining, asset sales)

5. Analysts expose the pattern (sold meat, kept sawdust)

6. Stock underperforms S&P by 48.5% (market punishes asset-stripping)

7. Company trades at commodity multiple (eventual decline/buyout)

**The parallel:**

**Butcher shop:** Sold all the premium cuts, ground tenants into sausage, ran out of inventory

**Dell Technologies:** Sold all premium assets (VMware $69B, software $8B), kept commodity hardware (18% margins)

**Both:** Short-term profit (butcher fed tenants, Michael Dell pocketed $26B), long-term doom (shop closed, Dell stock underperforms)

The Punchline: Only Sawdust Remains

**Dell's asset sales (2016-2023):**

- VMware: **SOLD** $69B (80% gross margins)

- Dell Software: **SOLD** $2B (70% gross margins)

- RSA Security: **SOLD** $2.1B (65% gross margins)

- Boomi: **SOLD** $4B (70% gross margins)

- EMC Storage: **DESTROYED** (market share 35% → 12%, value lost $24B)

**Total:** $101B in value sold or destroyed

**What Michael Dell kept:**

- Dell Latitude laptops: 18% gross margins

- Dell monitors: 15% gross margins

- PowerEdge servers: 25% gross margins (declining)

- Dell EMC storage: 35% gross margins (but losing 8% market share/year)

**Total:** 22% gross margins, 3.8% net margins

**The metaphor:**

**Delicatessen butcher:** Sold all the beef, pork, chicken → ground tenants into sausage → eventually ran out

**Michael Dell:** Sold VMware, software, security → kept laptops/monitors → eventually...?

**The French cinema ending:**

**Butcher:** Killed by tenants when they discovered the scheme

**Michael Dell:** Pocketed $26B, left shareholders with 3.8% margin sawdust business trading at commodity multiple

**The difference:** In French cinema, the villain pays. In American capitalism, the villain cashes out.

**P.S.** - This is Post 29. Dell bought EMC for $67B (2016), got VMware ($35B value). Spun off VMware (2021), sold to Broadcom for $69B (2023). Michael Dell's payout: $26B personal. What's left: Client Solutions Group ($49B revenue, 5% net margins), Infrastructure Solutions Group ($34B revenue, 8% net margins). Total: $83B revenue, 3.8% net margins. Like Delicatessen (1991): Butcher sold all the meat, ground tenants into sausage. Dell sold all high-margin assets (VMware 80% margins), kept commodity hardware (22% margins). Only sawdust remains. 🛡️

**P.P.S.** - Broadcom bought the meat (VMware), raised prices 200-300%, fired 2,700 employees, generated 85% gross margins. Broadcom stock: +90% (one year post-acquisition). Dell kept the sawdust (laptops/monitors), competes on price, declining revenue. Dell stock: -3.5% (underperformed S&P by 48.5%). Market verdict: Meat > Sawdust. Michael Dell pocketed $26B. Shareholders stuck with 3.8% margins. 💎

**P.P.P.S.** - VMware (13% of Dell's revenue) generated 43% MORE net income ($4.5B) than all of Dell ($3.15B). VMware market value at sale ($69B) > Dell's entire remaining business ($65B market cap). Dell sold the golden goose, kept the commodity hardware. Delicatessen ending: Butcher ran out of meat, shop closed. Dell ending: Sold all premium assets, trades at commodity multiple, slow decline into irrelevance. 🧱

**P.P.P.P.S.** - Delicatessen (1991) directed by Jean-Pierre Jeunet (Amélie). Post-apocalyptic butcher shop, no meat left, landlord murders tenants, sells as "specialty sausage." Customers suspicious, hero exposes scheme, butcher killed, shop closes. Dell Technologies: Bought EMC ($67B), sold VMware ($69B), kept commodity hardware (18% margins). Michael Dell pocketed $26B, shareholders stuck with sawdust. No hero to expose the scheme. Only analysts pointing at stock charts. The butcher already cashed out. 🧠

**P.P.P.P.P.S.** - Dell stock: -3.5% (Nov 2021 - Nov 2024). S&P 500: +45% (same period). Underperformance: -48.5%. Broadcom (bought VMware): +90%. Market verdict on Dell selling VMware: You sold the meat, kept sawdust, stock trades at commodity multiple. Michael Dell: "I'm $26B richer personally. Shareholders can eat cake." French cinema lesson: Eventually you run out of tenants to grind into sausage. American capitalism lesson: Villain cashes out, shareholders hold the bag. 🧈