Dell Partners: Amid EMC Deal Turmoil, We Just Need To Keep Our Eye On The Ball
Dell partners say they have to keep their heads down and operate as if Dell's planned acquisition of EMC will be completed, despite investor turmoil now surrounding the $67 billion deal.
"We're going forward with the assumption that the deal is likely to happen. We've got to plan accordingly," Scott Winslow, president of Dell partner Winslow Technology Solutions, told CRN.
Winslow said investors making demands in the face of declining EMC and VMware stock prices are just part of a litany of stresses that partners need to be aware of -- but also need to keep in perspective. Winslow Technology Solutions is a data storage specialist and does most of its business with Dell. Still, the proposed acquisition of EMC presents opportunities that Winslow wants to begin preparing for now.
[Related: Reports: EMC-VMware May Scrap Plan For Virtustream Cloud Joint Venture]
"There's still regulatory approvals that have to happen," Winslow said. "The 'go-shop' clause [which allows EMC to entertain competing offers] doesn't expire until mid-December, but we have to be planning as if this is going to happen."
Dell is pushing partners to maintain their focus, to "keep their eyes on the ball, close deals and sell what's available now," Winslow said.
At the same time, Winslow Technology Solutions is also participating in EMC training "to make sure when this thing hits, we're there," he said. "This is a real opportunity for us with the skill set we have. We think there's room at the EMC table for us."
In the face of sharply declining stock prices, investors reportedly are demanding that VMware buy back as much as $3 billion in VMware shares; that EMC and VMware unwind Virtustream, which is being blamed in part for the decline in VMware and EMC's share price; and that investors be given certain rights and protections with regard to the VMware tracking stock Dell said it intends to issue as part of the acquisition, according to Re/code.
VMware's share price has declined about 30 percent since the acquisition was announced in October. EMC's share price has declined about 11 percent since the news.
Geoff Woollacott, principal analyst at Technology Business Research, said investors are trying to convince EMC and VMware to maximize profits now – by getting rid of Virtustream, a federation company that builds enterprise cloud services on top of VMware assets – in order to extract as much value as possible out of VMware's operations. They do so, Woollacott said, "with no care or consideration to its impact on VMware's long-term competitive relevance."
The blockbuster deal's tax strategy reportedly has also been called into question, according to Re/codem leaving open the possibility that Dell could be on the hook for a $9 billion tax bill if IRS regulators do not approve of how the company is handling the VMware tracking stock.
"The stress as a partner is just the uncertainty if the deal will actually go through or not," said Paul Neyman, president of Houston-based Dell partner Waypoint Solutions. "It makes a difference for us on our strategy throughout the year, and the sooner we can see things solidify, the easier it will be for us to focus our efforts."
PUBLISHED NOV. 30, 2015