CEO Michael Dell To Short-Term Dell Investors: 'You Came To The Wrong Company'

Dell Technologies Chairman and CEO Michael Dell digs in on his long-term strategy, and discusses Trump, trade and the future of VMware.

Long Game

Dell Technologies Chairman and CEO Michael Dell may be on the verge of bringing his namesake company back to the public market, but the long-term focus he espoused when the conglomerate was privately held won't change, he said during an appearance on CNBC Monday.

Sponsored post

Dell, who started the company in his University of Texas dorm room, took it public 30 years ago, and then private in a $25 billion transaction in 2013, said his commitment to the long game hasn't changed. "We can continue to invest for the long term, and that is absolutely what we intend to do," he said.

The Round Rock, Texas, company announced Monday that it would go public through the exchange of its tracking stock tied to the performance of VMware for common shares of Dell itself. The transaction nevertheless leaves the chief executive in control of the company, thanks to the special shares he and ownership partner Silver Lake Partners hold. Dell will continue to own about 81 percent of VMware, which will remain an independent, publicly traded company. Dell's stake in VMware came as part of its blockbuster 2016 acquisition of data storage giant EMC.

Here are a few highlights, including Dell's take on the global economy and business conditions, from his CNBC interview.

'I'm The Ultimate Long-Term Investor In My Own Company'

Dell's last act as a public company wasn't always easy, and included a contentious back-and-forth with activist investor Carl Icahn. Dell wasn't shy about the benefits of being privately held for the nearly five years the company took that form. Now, the CEO says there's virtually nothing the company could do privately that it can't do publicly. Investors looking to Dell as part of a short-term strategy should probably look elsewhere. "I believe that given the structure that we have and the momentum that we have and the set of assets that we have, that we can continue to invest for the long term, and that is absolutely what we intend to do," Dell said. "Any shareholder that says we want you to do this to optimize for the short term, not the medium or the long term, you came to the wrong company. I'm the ultimate long-term investor in my own company."

Still Optimistic About Global Business Conditions

Dell was optimistic about the outlook for his company, and the global economy as a whole, when President Donald Trump took office. Now, he says he's even more optimistic about the global business environment, even amid the seeming chaos that has defined the Trump administration. "What I look at is the top 50 countries in the world, and almost every one of the top 50 economies in the world is growing," Dell said. "I look at our businesses, and they're pretty much all growing double-digits. It's not just large or small or medium customers, and not just this product or that product, it's every product, every region, almost without exception. There's definitely a technology-led boom that requires modern infrastructure, and we're the world's leader in that."

Concern And Confidence Around China

Trade tensions between the U.S. and China have riled pundits in recent weeks, but Dell said the countries are simply too dependent on each other to allow the relationship to deteriorate. "China is our second-largest market outside the U.S. to sell our products," Dell noted. "I still take the belief that the trade, as it relates to the U.S. and China, the countries are completely intertwined. It's mutually assured destruction if there's a massive breakdown in trade. It will be an extremely bad outcome for both countries. No one will win. Therefore, I think the likelihood of that happening is extremely low. Will there be modifications to trade flows and trade agreements? Probably so. But I think we're as well positioned, or as correctly positioned, as any company can be for that."

Silver Lake Is In It For The Long Haul

Silver Lake Partners, the private equity group that owns a large share of Dell, is unlikely to sell its stake anytime soon, Dell said. Silver Lake helped take Dell private in 2013, and now owns about 18 percent of the company. Dell said he's asked the firm whether it intends to sell its stake, and suggested that if that were the case he'd buy it out. "They've been very clear about their intention to continue to hold," Dell said. "They're very committed to the investment."

Dell Has No Plans To Go Anywhere Either

Dell famously founded the company in his University of Texas dorm room with the idea to sell inexpensive PCs directly to customers. Dell is only 53 years old, and says he has no plans to step away from the corner office. "I love what I'm doing, and if somebody told me I couldn't do this, I'd go into some kind of depression," he said. "I absolutely love what I'm doing, and absolutely plan to keep doing it for many, many years to come."

Tracking Stock Buyout Was Simplest Way Forward

Dell had a number of options for boosting capital and paying down its nearly $50 billion debt load, but buying out the tracking stock tied to VMware's performance was the simplest, Dell said. Dell suggested that the IPO route was perhaps the next-most likely, but that would've complicated things down the road. "Certainly, an IPO was an option," he said. "Other options were discussed. We concluded that this was the best of all the options. It's a relatively straightforward path, and it's a one-step simplification instead of a two-step simplification. The option to go public was very much there, but you would then later probably convert the tracking stock into the public common [stock], and so you create a little more complexity before you have less complexity. If you can do it in one step, that certainly is easier."

VMware Will Keep Its Independence

Since Dell acquired an 81 percent stake in virtualization power VMware when it acquired EMC in 2016, the relationship between the two firms has been the subject of considerable speculation. Would Dell fully acquire VMware? How close would the Dell-VMware relationship become? On Monday, Dell said VMware will continue to do what has made it what it is today. "We want it to remain an independent public company," Dell said. "VMware is doing great. The team is doing a fabulous job in moving the business for the multi-cloud era. Along with the turbo boost from Dell Technologies, VMware is extremely well positioned."