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The company said the evaluation was in an early stage and it was looking at options including keeping its current ownership.
VMware said a spinoff could result in a simpler capital structure and it has formed a special committee for talks with the corporate computing giant.
In case of a spinoff, Dell said it would negotiate payment of a special cash dividend by VMware to all its shareholders and would try to formalize commercial arrangements similar to those in place, including intellectual property agreements.
Shares of Dell jumped 8%, while VMware rose 5% in aftermarket trading.
VMware is currently Dell’s best performing unit as it benefits from companies looking to cut costs move to the cloud, a shift that is being speeded up by the coronavirus pandemic.
It had last year bought two providers of cloud security and developer services in deals that together valued at about $5 billion.
The unit’s revenue increased 12% in the latest reported quarter, even as Dell’s total revenue growth dipped.
The PC maker had returned to public markets in 2018, nearly six years after the company’s founder and Chief Executive Officer Michael Dell took it private in what was then the biggest buyout since the financial crisis of 2008. It happened after Dell bought back shares that tracked the financial performance of VMware in a deal worth nearly $24 billion.
