Dell Execs Behind The Scenes: We Can't Flip-Flop On Strategy5:00 PM EST Thu. Jul. 18, 2013
The scheduled vote for Dell shareholders about whether to accept the $13.65-per-share offer of CEO Michael Dell and investment partner Silver Lake Partners to take the company private will now take place July 24, moved from the original date of July 18.
The overall goal is to give the company time away from Wall Street scrutiny while it makes changes needed to refocus the company away from its PC roots and toward being a provider of enterprise IT solutions, Michael Dell has said.
Meanwhile, the moves by activist shareholder Carl Icahn and his allies, who maintain that the $13.65-per-share offer is too low compared with the upside shareholders might receive as Dell's business grows in the future, have led to a barrage of salvos between Icahn and the Special Committee to the Dell board.
Dell executives, for the most part, have remained quiet on the battle but have provided some insight into the path the company and its channel partners need to follow.
Dell executives Alan Atkinson and Pete Korce, both vice presidents and general managers for Dell storage, in general say publicly that they remain focused on the business.
Atkinson told CRN at last month's Dell Enterprise Forum that they are limited in what they can say.
"In short, Pete and I operate under the assumption that privatization doesn't change anything. ... Pete and I stick to our knitting and focus on Dell storage," he said.
"I don't think we've ever thought about it otherwise," Korce said.
Marias Haas, president of enterprise solutions for Dell, told CRN that Dell remains focused on its strategy of making enterprise a bigger part of its business.
Part of the confusion over the future of Dell's business as it moves to more of an enterprise focus stems from how customers view that business, Haas said.
"There's a difference between financial analysts and customer analysts," he said. "Financial analysts ask questions that help them fill out their spreadsheets to get their EPS [earnings per share] estimate. They will ask about the enterprise business but focus on PCs because it's one of the few things they can predict. But when you talk to customers, they understand how enterprise is having a bigger share of their business."
If Dell goes private, Michael Dell will be able to spend more time on the enterprise side of the business and less time on the PC side, Haas said.
"Right now, we're focused on our strategy," he said. "Being flip-flop on strategy creates risk."
For the channel, it's important to stay focused regardless of what happens, Greg Davis, Dell's vice president and general manager of global channels, told CRN.
When news of the privatization discussions first broke, Davis said he immediately started communicating with Dell's channel partners.
"I told them we will continue to invest in our channel programs," he said. "Those elements of our channel strategy will not change. For six years, we've been very consistent in investing in our channel programs. And growth in the channel has Michael Dell's support."
Davis said there is a strategic value for Dell in being a part of a customer's enterprise data center.
"Not many companies can take customers from the PC to virtual desktops to servers to storage," he said. "And we have the advantage of bringing the channel to the enterprise."
NEXT: The Dell Partner Perspective
Michael Tanenhaus, principal at Mavenspire, an Annapolis, Md.-based solution provider and Dell partner, offered insight from the partner perspective.
"Overall, one of the interesting things in working with public companies is, if everyone watched their stock price, then nothing would get done," Tanenhaus said. "So everybody is saying they keep rowing forward and focus on the business."
Even so, Tanenhaus said, the word from Dell's top executives is that the focus of the company will continue to be on turning Dell into an enterprise-focused IT provider regardless of the outcome of the shareholder vote.
"What's been trickling down from up high is, it doesn't change the plan," he said. "No one will wake up one day and see the plan is changed. But, it will accelerate the plan. If Dell goes private, people there will not be looking at what Wall Street is saying. But, the plan will be more aggressive."
One thing not addressed in all the discussions about Dell's privatization bid is the growing number of Dell deals that are being held up, he said.
"For us, the larger the customer, the more the hesitation," he said. "But other large customers think that if they close deals now, they can get the maintenance for the deals locked in."
Should Icahn and his allies end up preventing Dell from going private, it could mean even more problems for partners looking to close deals, Tanenhaus said.
"Icahn is noted for creating value by buying a company and selling off pieces," he said. "If that happens, Dell all of a sudden could be 18 new companies."
Roger Michelson, vice president and COO at BNMC, an Andover, Mass.-based solution provider and Dell partner, said it is frustrating to him and to the Dell employees with whom he works to watch the back-and-forth discussions about Dell's privatization bid.
"Dell made all these acquisitions over the years, and is moving into services," Michelson said. "So Dell partners can go to customers with a complete solution with services bundled around it. We could never do that before. But, Wall Street doesn't really see it. The frustration is that the company gets punished by those who only look at the number of products pushed this quarter, when that's not the business Dell is in today."
PUBLISHED JULY 18, 2013