Dell: LBO Would Mean More Channel Investment


A privately held Dell would be able to invest more in its Partner Direct program and solution providers, as well as in its PC and tablet business, following its proposed go-private transaction, according to an email from CEO Michael Dell to employees

A leveraged buyout of the company would realize at least five benefits: the ability to extend end-to-end IT solutions capabilities; hire additional sales personnel; compete aggressively in emerging countries; invest in the PC and tablet business; and accelerate delivery of a simplified and enhanced customer experience, according to the email, which was included in a document filed with the Securities and Exchange Commission.

Among the additional sales staff, Dell plans to increase support for its Partner Direct program for solution providers, Dell wrote.

[Related: Who's Who: The Key Stakeholders In Dell's $24.4B Deal To Go Private]

"Our goal is to increase sales coverage and expand the depth of partnerships with channel partners in our Partner Direct program. We also expect to significantly increase investment in training for both new and existing sales personnel, including our channel partners," he wrote.

Meanwhile, a go-private deal would allow Dell to make significant investments in research and development, capital expenditures and other personnel additions, Dell wrote.

"This includes hiring additional R&D, services and sales personnel in order to extend the depth and breadth of our capabilities and to increase the number of customers to whom such services and solutions are provided," wrote Dell in the email.

Additional investments are required in converged infrastructure solutions, software, cloud solutions, application development and modernization, consulting and managed security services, according to Dell. Additional acquisitions would be likely in order to complete the transaction, he wrote.

In the PC space, Dell's strategy has been to maximize gross margins. But, that would change to focus on maximizing revenue and cash flow growth "with the goal of improving long-term sales and competitive positioning," Dell wrote to employees.

Meanwhile, Dell also said he's challenged the company's ESG team to become the No. 1 server company, in terms of market share, in fiscal 2014.

"It is an exciting and achievable goal, which will put us in a strong position as converged infrastructure increasingly places compute at the heart of the data center," Dell wrote.

Dell reached agreement with Silver Lake Partners in February to take the company private for $13.65 per share, about $24.4 billion.

But, two other companies, The Blackstone Group and Icahn Enterprises, submitted bids during the "go-shop" period, and Dell is continuing conversations with all parties, the company said.

PUBLISHED APRIL 2, 2013