Dell Technologies partners are confident that the company's decision to go public will enable the $83.5 billion infrastructure giant to become an even more powerful channel force.
"In the long run, it will make us stronger," said Michael Murphy, president and founder of Nanuet, N.Y.-based VirtuIT Systems, a Dell EMC Titanium and VMware partner. "It's going to make them more powerful. They'll have more equity and the ability to do more. It makes a ton of sense. They're going to have more resources, more cash flow – Dell is going to be able to recoup that huge investment in EMC."
VirtuIT Systems' Dell EMC and VMware sales have been growing upward of 20 percent on a quarter-over-quarter basis for the past several quarters, according to Murphy. "It's a very good time to be a Dell partner," he said. "They've been doing a good job in keeping the partner program moving forward and going public will only help us."
Dell confirmed Monday that it reached an agreement to take the company public again on the New York Stock Exchange as part of a share swap with its DVMT VMware software business tracking stock. The Round Rock, Texas-based company will exchange each share of the DVMT tracking stock for 1.3665 shares of Dell Technologies common stock, or $109 per share. As part of the deal, VMware's board of directors has approved an $11 billion one-time special dividend to all VMware shareholders.
The confirmation ends nearly seven months of speculation as to whether Dell would seek an IPO, merge with VMware or continue as a private entity. The news is music to channel partners' ears, according to Kent MacDonald, senior vice president at Long View Systems, a Calgary, Canada-based Dell EMC partner.
"There was a lot of watercooler talk about Dell's future," said MacDonald, whose company is ranked No. 86 on the 2018 CRN Solution Provider 500 list. "Making the move will certainly add clarity to what the ownership structure is and creates predictability. It provides continuity versus spinning speculation. That's positive for both the partner and end-user community."
Dell Technologies stock was up 8 percent Monday afternoon to $91.53 per share, while VMware's stock rose nearly 10 percent to $160.64 per share.
Scott Winslow, president and founder of Winslow Technology Group, a Waltham, Mass.-based Dell EMC and VMware partner, said Dell's move to become public "comes from a position of strength."
For the first quarter of 2018, Dell became the worldwide leader in both server and storage market share, according to research firm IDC. Dell captured the lead with 19.1 percent global server share, generating $3.59 billion in revenue, up 50 percent year over year. For storage, Dell EMC took first place with 22 percent share and sales of $2.8 billion, an increase of 43 percent year over year.
The company also became the leader in the converged systems and hyper-converged infrastructure markets in the first quarter of 2018, according to IDC, as hyper-converged sales topped $363 million, up a whopping 142 percent year over year.
"They're winning market share, growing the company past $80 billion – so this is welcomed news," said Winslow, whose business is ranked No. 429 on the 2018 CRN Solution Provider 500 list. "This also mitigates the issue around debt expense and tax law changes that have transpired recently. The idea of raising equity and to be able to retire debt makes sense."
Dell Technologies Monday said it expects to generate upward of $88.5 billion in total revenue in fiscal year 2019, with long-term annual sales growth of between 4 percent and 6 percent over the next several years.
"This is a very different company than it was five or so years ago," said Dell CEO Michael Dell during an analyst and media conference call Monday morning. "We're seeing tremendous momentum inside the business. Earlier this year, we kicked off this process, looked at the various alternatives and concluded that [going public] was a great way to not only simplify the structure, but create flexibility for us and expose the great businesses we have here back to the public markets."
Dell said the company has invested more than $12 billion over the past three years in research and development. "That innovation has helped us capture and maintain leadership in virtualization, servers and storage," he said. "And our roughly 40,000-person sales force and growing partner program have consistently delivered competitive wins including with many of our largest customers, who represent 99 percent of the Fortune 500."