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HP CEO Whitman: Dell Leveraged Buyout Spells Opportunity For HP

Dell's pain will be HP's gain when it comes to the 'instability and uncertainty' sure to accompany Dell's $24.4 billion private-equity-backed leveraged buyout, said Meg Whitman at HP's Global Partner Conference.

"My view is that this is an opportunity for us collectively," Whitman told several thousand partners Tuesday in a question-and-answer session at the company's Global Partner Conference. "What I have learned the hard way and first-hand is instability in our business is not a good thing because you and your customers are making long-term bets on technology road maps, on people, on customer service and support and on innovation."

[Related: As Buyout Proceeds, Dell Reports 11 Percent Q4 Sales Decline ]

"Whenever there is instability like we had in August 2011," said Whitman, referring to HP's decision to consider strategic alternatives for the HP Personal Systems Group, "it creates a hesitancy, if you will, to buy. When a company like Dell undertakes a go-private scenario, this creates some instability and uncertainty."

"The good news," Whitman continued, "is we are coming out of our phase of instability and uncertainty and we are the trusted provider both in the server business, where we have the dominant market share and, in fact, gained some server market share last quarter. And in the PC business, we are the leader in that business. We want to make sure that we take advantage of the opportunity to again retell our story around innovation, tell our story around our customer support and service organizations that can help you sell to your customers."

Whitman's comments came as Dell Tuesday reported an 11 percent decline in fourth-quarter sales and an 8 percent drop in sales for fiscal 2013, in what could be its final financial report as a publicly held company.

For the fourth quarter ended Feb. 1, Dell reported sales of $14.3 billion, down 11 percent from $16.0 billion from the same period one year ago. Net income for the quarter was $530 million, down 31 percent from $764 million one year earlier.

For fiscal 2013, Dell reported sales of $56.9 billion, down 8 percent from $62.1 billion in fiscal 2012. Net income for the year was nearly $2.4 billion, down 32 percent from $3.5 billion in fiscal 2012.

Dell is increasingly coming under criticism from some shareholders, including one of its biggest institutional shareholders: Southeastern Asset Management, Memphis, Tenn. Southeastern has said it believes the $13.65 per share price grossly undervalues Dell. T. Rowe Price, another large Dell shareholder, also has complained about the price of the deal.

RICK WHITING contributed to this story.


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