Dell Technologies CFO: Expect Channel Disruption As Go-To-Market Strategies Are Integrated

Dell Technologies partners may be in for some disruption as the newly formed IT behemoth integrates channel programs and sales forces, according to senior executives.

"There may be some short-term disruption as we integrate go-to-market activities," said Tom Sweet, the company's CFO, during a conference call Thursday morning to discuss third quarter results with investors. "Our priorities are to successfully integrate our sales force and channel programs, and to seize top-line synergies through cross-sell opportunities," Sweet said.

Sweet's comments come just a week before Dell EMC is scheduled to roll out details of the new, unified Dell EMC Channel Partner Program. While some partners say they're nervous about that disruption, mainly because they don't quite know what to expect, others say the way forward for solution providers is to begin aggressively selling across the broad Dell EMC portfolio.

Related: CRN Exclusive: Dell EMC's Sakac On Partners' Path To Profits In The Cloud And Why The Channel 'Has To Be Disrupted'

"They're being very tight-lipped about it, and everybody's bracing for the worst," said the top executive at a regional solution provider that was a 100 percent Dell partner before the merger with EMC. "With Dell, the top [partner program] tier was $5 million in annual revenue. In EMC it was $20 million up to $100 million. It's a complete different magnitude and a lot of people are really concerned. There's very little they can do that won't cause huge change."

A top exec at a large solution provider that worked with Dell and EMC before the acquisition said the fact that the company hasn't been free with details about its new channel program doesn't mean partners should worry. "I'm sorry to say I've heard nothing. Crickets. But they have a plan, and at some point, they'll make an announcement. They got [partner] feedback, and not every decision is going to be made by committee," he said.

And while partners are just beginning to take advantage of opportunities created by the merged Dell EMC, Sweet said more acquisitions are not out of the question.

"There's a long-term consolidation trend happening," Sweet said. "We have the financial capacity. We have an ownership structure that if there was an opportunity out there for us, if something were to come up and there was leverage available … We're going to continue to be interested in what happens in the market."

Dell Technologies was created by the landmark $58 billion merger in early September of Dell and EMC. The company is private, but because it issued a tracking stock tied to the performance of VMware as part of the transaction, it is required to publicly file earnings reports, host quarterly earnings conference calls and hold an annual shareholders meeting.

Financial details discussed Thursday include 52 days of results from EMC and VMware, and include non-GAAP revenue of $16.8 billion and non-GAAP operating income of $2 billion. With the impact of the merger and other costs are factored in, revenue for the quarter was $16.2 billion and the company reported an operating loss of about $1.5 billion.

The company took on more than $47 billion in debt to make the EMC merger work, and said it would pay down those obligations aggressively.

Tyler Johnson, the company's treasurer, said Dell Technologies current debt load stands at about $56.8 billion. The company closed the $2.4 billion sale of its software group, as well as the $3 billion sale of its services group during the quarter, and applied those proceeds to settle $4.3 billion in debt, Johnson said, adding that the $1.6 billion sale of EMC's Enterprise Content Division is expected to close before the end of the year.

Revenue was $9.2 billion for the Client Solutions Group, up 3 percent year-over-year. CSG earnings were $634 million. The Infrastructure Solutions Group posted operating income of $897 million on $6 billion in revenue. For the 52 days since the merger, VMware booked revenue of $1.3 billion and operating income of $548 million.