Pressed On Potential EMC Deal, Michael Dell Says He Isn't Ruling Out Any Storage Acquisitions

Michael Dell, just days after reports surfaced he was engaged in talks to merge with EMC, told CNBC Tuesday that he isn't ruling out any acquisitions.

The Wall Street Journal reported Monday that EMC, under pressure from an activist investor and facing the potential retirement of CEO Joe Tucci, had held merger and acquisition discussions with both Hewlett-Packard and Dell.

"We're very interested in the storage market. Certainly as there are opportunities to expand inorganically, we'll consider those," Dell said in the CNBC interview when asked if the company would be interested in buying pieces of EMC should they come up for sale. "But I don't have any comments on a specific idea that may be out there."

[Related: Do The Math: Investor Pressure Behind Possible EMC Merger, Acquisition]

While many Dell partners said they would welcome a merger between EMC and Dell, financial analysts said the deal would be almost impossible for Dell to pull off since it is now a private company.

Michael Dell told CNBC he will continue to make mergers and acquisitions as a private company. "We have done a number of acquisitions, really never used stock, we used cash," Dell said.

In March, Dell made its first acquisition as a private firm when it bought StatSoft, a data analytics company that specializes in a wide range of data mining, predictive analytics and data visualization services.

Patrick Moorhead, founder, president and principal research analyst at Moor Insights & Strategies, maintained that Dell, which one year ago completed the largest private equity buyout in the past several years at $24.9 billion, would have trouble getting access to the type of capital needed to buy EMC's storage business.

"It would cost Dell between $20 billion to $25 billion for EMC's storage business," he said. "I just don't see how Dell can make that work." Moorhead pointed out that Michael Dell could, however, step up and buy the business with his personal fortune.

Kevin Reynolds, solutions architect at Vology, a Tampa, Fla.-based solution provider and Dell partner said Dell has a lot on its plate already.

"Dell is famous for mergers and acquisitions -- it's in their blood," said Reynolds. "I think it makes sense if they are trying to grab more market share. But honestly, I think Dell's hands are full with its Nutanix OEM deal and services around its EqualLogic and Compellent business."

From a revenue point of view, Dell and EMC would be a force to be reckoned with, said Michael Tanenhaus, principal at Mavenspire, an Annapolis, Md.-based solution provider and Dell partner. But when it comes to culture, Tanenhaus said, Dell and EMC coming together could be potentially "disastrous."

"Dell has been thinking about the whole IT solution, where EMC has a very focused portfolio," Tanenhaus said. "It would be extremely hard for Dell to merge its culture and intellectual property with EMC." He said, "I'm solidly in the not-a-good-idea column."

Over the past several years Dell has made more than 30 acquisitions including Quest Software, SonicWall and Wyse Technology. Dell executives have said, as a private company, it's now taking the time to streamline those acquisitions.

"We'll continue to make acquisitions," Dell told CNBC. He added, that right now Dell had "all of the key technologies that we essentially need."

"We'll do acquisitions, but partnerships play an important role," Dell told CNBC. "You can't buy everything, you can't do everything yourself, so we're going to work with Oracle and Microsoft, and SAP, and Adobe, and Cloudera, Red Hat. There's a lot of great companies in the industry."

In June, at its Dell User Forum conference, Dell unveiled a swath of IT appliances in partnership with Oracle, Cloudera, Fusion-io and Nutanix.

"And we'll continue to leverage the hardware partner ecosystem that's been an important part of what we do," Dell said in the interview.

PUBLISHED SEPT. 24, 2014