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Did Dell CFO doubt EMC acquisition?

Did Dell CFO doubt EMC acquisition? 

 The $67 billion deal to acquire EMC is still under consideration for regulatory approval in some jurisdictions so officials and personnel from Dell and EMC are restricted from what they can discuss in public about the negotiations especially when it comes to forward-looking topics.

 However, at Dell’s Power to Do More event in Toronto, Dell big wigs allowed themselves some latitude to talk about things about the deal that have already transpired.

 Sweet said the idea of the merger came about during a conversation between Dell and Joe Tucci, president and CEO of EMC when the two discussed “wouldn’t it be great to have the two companies together.”

 Shortly after, Dell told Sweet about it.

 “I remember…it was on July 30th (last year) at 4 pm in a hotel café in Lansing, Michigan,” Sweet told an audience of or more than 150 Dell employees and partners. “The conversation lasted about 24 minutes. When he told me about the plan, I said ‘seriously?’”

 The audience broke into laughter.

Actually, Dell has been trying the use humour to lighten up the talk around what is arguably the largest deal in recent years in the technology industry. If and when the acquisition is approved (which will likely anywhere between July and October this year), the resulting joint entity will become one of the world’s largest cloud technology and services organization in the world.

 According to the latest figures from analyst firm IDC, the combined cloud infrastructure revenues of a Dell+EMC entity (based on 2015 revenues) would total US$5.3 billion. That would place the new company far ahead the sector’s current leader Hewlett-Packard Enterprise, which accounted for $4.5 billion in cloud infrastructure revenues last year.

 Humour was a big part of Kevin Peesker’s opening keynote when he tackled the Dell-EMC merger.

 The Dell Canada president used the cartoon image of a “pink fluffy unicorn” (a character which Peesker said he used to tell his daughter the difference between fact and fantasy on TV) to point out the facts and fiction around the discussion about the merger.


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For instance, there are talks that the $67 billion acquisition will put Dell in debt that it won’t be able to invest in research and development.

 The pink fluffy unicorn is flashed on the screen and carnival music plays as Peesker explains that Dell has actually made billions in net new sales globally and is investing on thousands of new talent.

 More seriously, though, Dell’s acquisition of EMC can be instructive to other organizations because it tells us what companies of this magnitude consider when they want to expand.

For example, Sweet admitted that while Dell has been growing the company had some important shortcomings.

 “We needed better ability to tell the story with regards to our portfolio. We were not getting the message out,” he said. “Our coverage was not where it was supposed to be.”

 He said in the last three years, Dell had increased its R&D spend in infrastructure and emerging technology.

 Although when asked by Peesker how it was decided that EMC should be the company to acquire Sweet joked “rock, paper, scissors,” the Dell CFO said the explained the decision was based on the need to “position Dell to help customers get to where they want to go.”

 Meaning, the purchase is not about growth for growth’s sake, but about acquiring technology and capabilities in-line with Dell’s goals. EMC rounds out Dell’s hardware and datacentre solutions and security offering with storage and cloud infrastructure capability.

 Dell’s latest push is to help enterprise and SMBs become “future-ready” and transition from legacy platforms to a cloud-based infrastructure — particularly the hybrid cloud which Dell believes is where the market will ultimately head.

 Sweet noted that there were questions about Dell’s big acquisition especially at a time when the PC market is declining.

 “Yes, it is on the surface flat,” he said. “But what they missed is if you put our (Dell’s and EMC’s) compute models together, it creates an enormously powerful platform.”

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