EMC warns of difficulty moving into SMB channel

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EMC warns of difficulty moving into SMB channel

EMC is warning investors that a push into the small and mid-size business could adversely affect its businessv after it is acquired by Dell.

In a recent filing with the US Securities and Exchange Commission, EMC, which says it does about 60 percent of its business through the channel, is predicting that an increased reliance on channel partners "may negatively impact" gross margins.

"As we focus on new market opportunities and additional customers through our various distribution channels, including small-to-medium sized businesses, we may be required to provide different levels of service and support than we typically have provided in the past," EMC said in the filing.

"We may have difficulty managing directly or indirectly through our channels these different service and support requirements and may be required to incur substantial costs to provide such services, which may adversely affect our business, results of operations or financial condition."

EMC has traditionally focused on high-end enterprise customers while Dell, its soon-to-be parent company, used its renowned supply chain to become a leader in the consumer, small business and mid-market arenas.

After Dell completes its more-than US$62 billion acquisition of EMC, the companies are likely to focus on their traditional strengths: Dell on the midmarket and EMC on the high end, Miller said. To the extent that those efforts overlap, Miller said he is confident Dell will have processes in place to mitigate any hardships.

For EMC's second quarter ended 30 June, perhaps its last as a stand-alone, publicly traded company, EMC's revenue was essentially flat year-over-year at US$6.03 billion while its profit jumped more than 21 percent to US$630 million or 29 centers per share.

The Dell-EMC merger, which will result in the creation of Dell Technologies, is expected to close before the end of October.

This article originally appeared at crn.com

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