Michael Dell to Keep Making Deals After Acquiring EMC
Michael Dell, who is preparing to complete the largest merger in technology history after taking his own company private three years ago, says there’s even more deal-making in his future.
"We’ll continue to do acquisitions," Dell said in an interview in Las Vegas at VMworld, an annual conference put on by VMware Inc. (NYSE: VMW), which is majority-owned by EMC and will become part of the new Dell Technologies when Dell Inc. (Nasdaq: DELL) and EMC complete their $67 billion merger later in 2016. "I also think that alliances will continue to be super important to us -- alliances and partnerships, both for Dell Technologies and for VMware."
Dell, chief executive officer and founder of his namesake personal-computer company, agreed to buy EMC in October 2015, aiming to broaden both companies’ product lineups -- from servers to storage devices and key software services -- amid intensifying competition. Hardware companies are facing pressure from cloud-based products that enable customers to rent computing power from Amazon.com Inc. (Nasdaq: AMZN) or Google, rather than buying and maintaining their own systems from the likes of Dell and EMC.
EMC shareholders approved the Dell merger with 98 percent support in July 2016. Before the deal is finalized the companies must still receive regulatory approval from China. The merger is on track to be completed in the period ending in October 2016, within the original timeline, Michael Dell said in a separate press conference. In 2013, Dell took his company private for about $25 billion.
Meanwhile, Dell has been making progress with key product lines. Its server line grabbed 18.3 percent of the global market in the first quarter, up from 18 percent in the year-earlier period, according to IDC. Still, the overall market for those powerful machines shrunk by 3.6 percent. In PCs, Dell desktop and laptop computers accounted for 16 percent of shipments in the second quarter, up from 14.6 percent. The total PC market declined, though at a slower pace. The external storage business, including products Dell will gain with the EMC acquisition, is under pressure, shrinking by 3.7 percent industrywide in the first quarter, according to IDC.
"The market will do what it’s going to do," Dell said. "What we see is a tremendous opportunity here, bringing together servers, storage, virtualization, software-defined, converged, hyper-converged.”
VMware, which specializes in virtualization software that makes data centers more efficient, has fared better of late, reporting second-quarter sales that topped estimates, while EMC met analysts’ projections for unchanged quarterly revenue. Michael Dell and VMware CEO Pat Gelsinger both said they expect VMware to continue to devote a big portion of its resources to research and development. At its event in Las Vegas, VMware touted new products that help customers manage applications hosted in the cloud.
"This is a period of consolidation in the industry," Gelsinger said, adding that the companies are "better together."