Dell is Considering a Sale To VMware in What May Be Tech's Biggest Deal Ever (cnbc.com)

CNBC reports: Dell Technologies could emerge as a public company through a reverse-merger with VMware, the $60 billion cloud computing company it already controls, according to people familiar with the matter. The reverse merger, whereby VMware would actually buy the larger Dell, would then allow Dell to be traded publicly without going through a formal listing. It would also likely be the biggest deal in tech industry history, giving investors who backed Dell's move to go private in 2013 a way to monetize their deal, while helping Dell pay down some of its approximately $50 billion debt.

Comments

So Dells service will get even worse?

[greenwow]

Never thought that could happen, but here we are.

Corporate Raiders

[Anonymous Coward]

Right out of the Corporate Raiders playbook. Buy a company, bleed
it dry, make it borrow (hence the 50 billion debt), and dump it, in this
case to the public.

This isn't surprising

[rsilvergun]

Following the big tax cut most CEOs when asked said they'd spend the money on mergers and acquisitions. Expect to see more of these..

Re:I only have one question

[110010001000]

You should always be prepared if your business depends on a closed source software company. They could drop a product and you would have no recourse. If you don't have the sourcecode you don't have anything.

Re:I only have one question

[Rob Riggs]

Is this more or less a game on paper to get an infusion of cash for Dell, or could this actually have an effect on the VMWare business where I should be prepared for a chance of VMWare dying off?

If you are a shareholder in VMware, you're about to be screwed. If you think Dell will hang like an albatross around VMware's neck and you are a VMware customer, you're screwed. If you are an investor in Dell, your are about to spread the cost of your fuck-up on the public market, and specifically on VMware's other shareholders. (See stories hitting the wire that look like "VMware plunges on news...)

Not for your bonuses

[rsilvergun]

odds are those were planned well in advance (I suppose it's possible you're a C level employee, in which case bully for you). I haven't heard a peep about wage increases except from Walmart, and aside from Fox News all the analysts agree those wage increases were because the economy's recovered enough they have to pay more to keep workers, nothing to do with the tax cuts.

Meanwhile the mergers and acquisitions are putting everybody's jobs at risk. After all, what's the first thing a company does after a M&A?

Re:Not for your bonuses

[thaylin]

Actually it has nothing to do with willingness/ability, but with people transitioning jobs. If you are unwilling/unable to work you are not on the unemployment rolls.

Re:I only have one question

[swb]

Who can tell?

Dell has mostly re-branded themselves as DellEMC, which I think was supposed to be an upgrade for the Dell name to associate it with the EMC brand. That being said, I always thought buying EMC was just a gimmick to get VMware but in my exposure it sure seems like EMC won internally, and the Dell people were shoved aside.

Overall, I don't understand their conflicting strategy. If you talk to a "Dell EMC" rep for more than 5 minutes, they will try to sell you their 3x overpriced EMC vxRail platform which is VMware vSAN on top of proprietary mini-blade chasis of like 4 nodes.

The strange part of the whole hyperconverged storage/virtualization model coming out of DellEMC is that EMC is a major SAN vendor selling against its own brand/products, made worse by ALSO selling Nutanix which directly competes against VMware vSAN *and* the SAN business.

I think the company is so big and has so much overlap they need to reconsider what they're doing and greatly trim product lines. I can't help but think VMware innovation is totally choked by being owned by a giant hardware company -- any innovative ideas that don't involve selling more and more expensive hardware will die on the vine. The hardware side can't adapt to emerging software defined storage unless its meant to boost VMware first. And of course everybody has to bow to EMC's giant portfolio lest someone mess with their accounts.

I would have thought the smarter play for Dell would have been to have kept VMware as a wholly owned subsidiary but let it self-manage (even if self-managing didn't mean coding for Dell's proprietary platform) and then sell off EMC. EMC seems like the dinosaur whose market can't really ever grow that much because the products are too expensive for anything but Fortune 500.

Re:Why get rid of a money maker?

[jellomizer]

Because it allows the company to put more money in resources that make more money.
Lets say you have a Lemonade stand.
That sold Lemonade, and Cookies.
Every glass of Lemonade makes a profit of $0.50
Every cookie makes a profit of $0.25

You find that Customers will buy a glass of Lemonade or a Cookie but rarely both.
So lets say on average you make $75.00 a day on that one stand.

Now your line at your stand is very long, so there are people leaving the line or just not waiting.
You need to have an other stand, but you do not have the money to make a new stand and man it.
So you sell your cookie recipe and rights to it for the cost of making a new stand plus some extra for an other employee.

So now you can sell twice as much Lemonade as before, even at the expense of not having cookie sales. You end up with more money.
Because you will now make $100.00 a day for each stand, with 2 stands you make $200.00 a day.

So by selling off a profitable item and reinvesting its money, you now have 2.5 times the profit.

When companies merge

[rsilvergun]

they fire redundant staff. Sometimes even if the staff isn't redundant they lay people off to recover the costs associated with the merger and make the survivors work harder. If you've never experienced this first hand you are either very young or very lucky.

Unemployment might not be as low as the stats make it look. If it really was 4% we should be seeing much, much stronger upward momentum on wages. So far it's barely keeping pace with inflation. Walmart's seems higher because they've been putting off pay raises for 7 or 8 years.

Re:When companies merge

[bobbied]

Ah, you assume way too much.. I hired on at a telecom that had just been merged from two companies in 2000 and kept that job for 12 years while the company went from 1200 employees to less than 500. I finally got the ax just before one of our customers purchased us to save money. The company apparently knew what was going to happen so they took pre-sale steps to adjust their books. So I've been there, done that. I've been left behind and the victim of a layoff. (The layoff was the best financial thing that ever happened to me, but that was because of the severance package.)

The reason we've not seen an uptick in wages is because we've had abysmal GDP growth numbers from 2008 though most of 2016, there was little hiring over attrition plus new people entering the labor pool. There was a huge pool of under employed and folks who where not in the labor market (where neither counted as unemployed or in the labor participation numbers). This pool is rapidly depleting. Since about November or 2016 the momentum has been growing and GDP growth has been ticking up close to 3%. This rate seems to be ticking up and anything over 2.5% is good for labor.

Raises will come. This year is my guess. But I will warn you that inflation will ALSO come along with higher interest rates. We've effectively been printing trillions of dollars and this will have an inflationary effect as or GDP grows, labor becomes scarce and productivity increases will be what drives GDP growth.

Re:This insanity should be illegal

[nealric]

It's amazing. I can have a baby in the Cayman Islands tomorrow, and nobody even has to have sex!

Re:This insanity should be illegal

[geek]

Jesus, people still harp on this "Corporations are people" bullshit?
https://en.wikipedia.org/wiki/...

Read that and try to rationally argue against it. The very first paragraph should shut your whining up but god forbid people actually educate themselves and understand what "personhood" actually means in legal terms.

FFS its a tired ass argument with zero merit and a shit ton of FUD behind it.

Re:What's Icahn say?

[dgatwood]

*shrugs*

That's the way people who worked at Apple through the transition often jokingly described it. The current macOS is, despite your protestations, almost entirely derived from NeXT + new code. It shares almost no code with Mac OS 9 and earlier. Basically, NeXT acquired Apple's name and marketing department, and then slowly integrated Apple's engineers over the course of half a decade.

Regarding your five points specifically:

1. (Perot) Out of NeXT's board, Apple kept the ones with actual computer industry experience (SJ and Avie). Perot was just a financier, which Apple had no need for at the time.

2. (Marketing) Why would they change marketing focus? Apple was actually making money. The value of the reverse acquisition was in the Apple name and marketing, rather than in the tech.

3. (Display Postscript) Nor does it use any of the windowing and display management code from Mac OS 9. OS X's WindowServer tech was a ground-up rewrite, AFAIK.

4. Apple stopped being monochrome-only with the Macintosh II, way back in 1987, almost a decade before the NeXT reverse acquisition. The last monochrome Mac was the Classic II, which was discontinued in 1993, about three years before the NeXT reverse acquisition.

5. Carbon is only still around because of Adobe and a few other holdouts. Otherwise, it would have been gone by 10.2 or so. It was always intended to be temporary. As it stands, all but a few low-level bits of Carbon are unavailable in 64-bit apps, and will go away when 32-bit support goes away. Either way, using Carbon as proof that NeXT engineering didn't completely take over Apple's engineering is approximately equivalent to saying that two cars are the same because they use the same cupholders. :-)

Re:This insanity should be illegal

[Earthquake Retrofit]

I'll believe corporations are people when Texas executed one.

You'll forgive me if after 8 years

[rsilvergun]

of constant productivity increases being told 'raises will come' rings hollow. GDP or not we'd recovered from the 2008 crash in less than 2 years. Wages dropped like a rock then as everybody (except CEOs) took paycuts. Every day I turn on the news and the stock market's hitting records but boo-hoo-hoo the GDP means we can't raise wages, meanwhile I read stuff like this

We're in full trickle down mode (minus the trickle down, which never happens, just ask Kansas). This is what happens when you give all the money to 1% of the country. GDP _can't_ grow because all the capital is tied up in offshore bank accounts. If you let them the Aristocracy will roll us back to another Dark Age, not out of spite, but because they'll claim all the money for themselves and our entire economy will grind to a halt.

I'll remind you that the best times in American Economic history were when we had a 90% top marginal rate.

Re:You'll forgive me if after 8 years

[bobbied]

Oh please spare me the Social utopian clap trap and class envy. It doesn't help your case.

On most of this we disagree. I guess we will simply have to wait and see if the "trickle down" part actually works. I think it will, you don't. Seems that it's doing pretty darned good right now and things are looking to get better, but you don't. So let's discuss how things are going in two more years or so...

Also, remember one simple fact.... Bulls and Bears are both eventually right. Which means that if you stick with your "It's going to crash!" mantra long enough, it's going to be true. The issue here is if the theory that we used to generate our forecast actually works. I dare say yours doesn't. I remember the hordes of prognosticators that said the Republicans and Trump would kill the stock market and the economy with their reckless policies all though the election and into the first year of Trump's presidency. This was based on your theories. Problem is, the forecast has so far been totally wrong. Could it be there is actually some truth over here on the right? I see evidence of it myself.

Shall we agree that "time will tell"?

Predicted in 2013

[packrat0x]

As predicted by My Comment back in 2013.

Unfortunately, these "going private" deals usually end with an IPO 2-3 years later. Same old compay with extra debt! The refinancing will make no difference to Dell, since "providing useful products and services at a profit" is what management should be concentrating on.
1) Use other people's money to buy up company
2) Pay self fees for being the Buyout fixer (Profit $$$)
3) Wait 2-3 years
4) Perform IPO
5) Pay self fees for being the IPO fixer (Profit $$$)
6) Sell new shares (Profit $$$)