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Dell, EMC Said To Be In Merger Talks (itworld.com)
itwbennett writes: According to a Wall Street Journal report (paywalled), Dell might buy some or all of storage giant EMC. (The grain of salt here is that the Journal's report cited unnamed sources, and cautioned that the companies might not finalize any agreement.) If the report has it right, though, "a total merger would be one of the biggest deals ever in the technology industry," writes Stephen Lawson for IDG, "with EMC holding a market value of about US$50 billion. It would also bring together two of the most important vendors to enterprise IT departments."
Oh the humanity!
Something else for Dell to foul up.
You understand that Dell sells enterprise hardware already, right?
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Dell is reportedly in talks to buy all or part of enterprise storage powerhouse EMC, which would mark a bold and unexpected new chapter in the PC maker's history.
According to unnamed sources in the WSJ, who also cautioned the companies might not finalize any agreement. Cautionary tale.
Sort of like this, these deals don't always materialize.
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Dude, you got laid off!
Seriously, though, what a unholy mess that would be. EMC grew by acquiring a lot of other companies, then spinning them off, and not really doing a fantastic job of integrating anything, then laying off tens of thousands only to hire again. Dell has it's own history of being huge, then being private, now seemingly on the roll again. It would be a fitting end for the the execs at EMC that acquired and fired to get acquired and fired themselves, although the big difference will be that they will get some giant golden parachute.
I used to work for Dell- I remember at one of the company meetings, I think it was Michael Dell himself, referring to EMC as "Excess Margin Corporation" - of course this was before they were partnering on projects.
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EMC, Cisco and VMWare are tied up in a sort of loose alliance to sell cloudy boxes to large companies (VBlock.) I wonder what would happen with that, and also whether Dell would own VMWare. That would be a pretty huge reversal of fortune for Dell. I guess that trip through privatization let them fix the company without being under the microscope every quarter. It seems to me that this would be a lesson for companies looking to IPO -- unless you need access to billions and billions of dollars in funding, being out of the public eye can be a good thing.
I honestly haven't looked at Dell hardware for a very long time, since most of the physical stuff we deploy is outside of the US and they have horrible international warranty service. Their low end consumer PCs are garbage and always have been, but I've heard the business lines of desktops, laptops and servers are still halfway decent.
Dell can't 'acquire' EMC, there's no way they have the cash.
"Another report, this time fromre/code,HYPERLINK "http://recode.net/2015/10/07/emc-is-looking-to-sell-part-of-its-business-to-dell/"citesits own sources to the effect that EMC was merely trying to offload its VNX line"
This rumor is more credible, Dell could probably afford something like the VNX line.
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I would argue that acquisitions is more destructive than constructive.
Frequently that is true and there is plenty of academic research to support this thesis. It's not true all the time however. There are plenty of very successful acquisitions and it's not hard to find them. I've been involved with a few successful ones myself. It's not hard to find acquisitions that destroyed value though.
The ones that tend to work best are bolt on inquisitions between companies with similar cultures. Integrating two companies is hard but if the cultures clash it will almost certainly be doomed from the start no matter how promising other facets of the deal might be.
Where does Brocade come into this?
Nowhere. And if Brocade was smart, they would never sell to Dell. Going to dell is a good way to kill off your company.
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Acquisition MIGHT be something which can be made to work.
There's no need to qualify that statement. Some acquisition activity is demonstrably beneficial. Berkshire Hathaway is a great example of a company that does lots of acquisitions. But the reason it works for them is that they are careful not to screw up what made the company they are acquiring great in the first place. (In fact they largely leave the acquired company alone aside from some capital allocation) Apple also is a pretty good example of a company that seems to usually do a good job with acquisitions. They get small companies for very clear reasons whose products are a clear fit with what Apple is trying to do. M&A can be a great way to cherry pick good new products and R&D. Pharmaceutical companies do this all the time with pretty good success. It CAN work but it's not easy or simple.
Other companies manage to screw it up royally. Daimler's merger with Chrysler. AOL with Time Warner. A big auto supplier I used to work for went bankrupt because they bought another big auto supplier in bad financial shape and couldn't digest the acquisition. Stock price went from $50 when I started to under $5 when I left. CEO made a deal literally on the golf course to try to grow the balance sheet top line but didn't do adequate due diligence and the bottom line went to hell.
Dell can't 'acquire' EMC, there's no way they have the cash.
You don't need cash to do an acquisition or merger. It can be an all stock transaction which is essentially funny-money with no cash changing hands. Cash is nice but not actually required as long as your stock price is high enough.
Ok, they don't have the cash or equity either to 'acquire'.
Sure they do. All they have to do is issue stock and have the shareholders of the other company accept that as payment. You can call it a "merger" if you want but functionally it will be an acquisition by one company or the other at the end of the day. One management team is going bye-bye and whose left will tell you who bought who. Chrysler merging with Daimler was a "merger of equals" but not really. Happens all the time.
I also ran Avamars (replicating to DR site). We struggled with the product's reliability and upgrades never seemed to work correctly. Some of the management was through the Java front end, others were using the Linux CLI. It all seemed very disjointed. Switched to Dell's Appassure about 2 years ago and haven't looked back. One management interface (website) and upgrades are pretty simple. Also much cheaper than Avamar.
One of the other issues I didn't like with Avamar was the licensing model. I bought the servers, but then had to pay again to utilize all of the storage available. This made it a very expensive backup solution. With Appassure I can attach as much storage as I want to the server and never pay extra.
No, I do not work for Dell or any of their companies. I'm just a satisfied customer with a solid team supporting me.
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