What Dell partners should know about the vendor going public

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What Dell partners should know about the vendor going public

The news of Dell Technologies reaching an agreement to take the company public again sent shockwaves throughout the IT world. 

Since the US$83.5 billion infrastructure giant confirmed the news this week, Dell has been sending a flurry of messages to its sales community.

CRN USA breaks down what chief executive Michael Dell, president and chief commercial officer Marius Haas and president of global enterprise sales and customer operations Bill Scannell are telling its sales force about the company's plans to go public.

No sales disruption expected

In a July 2 letter to partners and customers disclosed in a US Securities and Exchange Commission filing, Michael Dell said that "for our customers and partners, nothing changes".

"All of our companies, Dell, Dell EMC, VMware, Pivotal, RSA, SecureWorks and Virtustream, will continue to operate as they currently do," wrote Dell in a letter to partners and customers filed with the SEC.

"We remain committed to delivering a robust portfolio of solutions and services to address your IT needs …  and as a public company, we will keep the same strategic focus on long-term growth that has helped us strengthen, reshape and grow our business."

Dell said the transaction would enable Dell to build on market momentum "without disruption".

Easier for partners to cross-sell

According to a 2 July email sent to Dell Technologies global commercial and enterprise sales team and signed by Haas and Scannell, being a public entity will better reflect the entire portfolio and value of Dell Technologies seven brands:  Dell, Dell EMC, VMware, Pivotal, RSA, SecureWorks and Virtustream.  

"The only change will be that our public stock will now reflect the full value of Dell Technologies' family of businesses," Haas and Scannell wrote. "Dell Technologies is focused on making it easier for partners and customers to transact across the entire family of businesses."

Increase R&D funding 

Dell will begin to invest about US$500 million more in research and development each year. Over the past three years, Dell has invested roughly US$4 billion in R&D annually. Dell "intends to spend approximately US$4.5 billion per year in the future," Haas and Scannell said.

VMware synergies

Haas and Scannell also said VMware had thrived as part of the Dell Technologies family and seen tremendous traction and strategic relevance with customers, resulting in significant revenue growth and financial performance.

VMware generated US$400 million in revenue synergies in the 2018 financial year related to its affiliation with Dell, and is on track in FY2019 to achieve US$700 million faster than initially expected, according to the executives.

"After the transaction, this winning formula will continue with VMware retaining its independent status, strategy and capital allocation policy," Haas and Scannell said.

During a conference call on 2 July, Michael Dell said, "We are excited about VMware's independent future as a company. As we examined all the options, you obviously know where we came out. We don't have any future plans to change the structure."

'It is the right time'

Haas and Scannell said there were a few key reasons why "it is the right time" to bring the full Dell Technologies portfolio to the public market, including the recent repositioning of its product offerings.

Additionally, the two executives said Dell's robust financial model with attractive growth and cash flow, as well as a strong balance sheet and financially flexibility, made it the right time to go public.

"Dell Technologies has taken a long-term approach to the benefit of our customers and other partners. We have been a public company as long as the tracking stock has been outstanding," Haas and Scannell wrote.

"Do not be distracted by this news – use it as an opportunity to reinforce our strength and why we are the partner of choice for IT infrastructure."

Upcoming milestones to go public include a proxy filing over the next few weeks and a stockholder vote of tracking minority stockholders sometime in late summer or early fall.

This article originally appeared at crn.com

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