The news is everywhere, and has been for days: VMware currently trades as.
The implications and details of this deal are legion, and there is a wealth of detail out there, good and bad, so I’ll point you at the commentary I think is most worth bothering with rather than re-hash the same stuff here. My thoughts will follow. Do read these things, because it’ll give you the background to deal with what I talk about here.
- The official statement from Dell. Key quote: “The combined company will focus on rapidly de-levering in the first 18 to 24 months following the closing of the transaction, and on achieving and maintaining investment grade debt ratings.”
- The official statement from EMC.
- Some analysis by Chris Mellor at The Register. Chris is a smart guy who tracks the storage market closely, and this is a good piece on the product portfolio overlaps.
- Barb Darrow has written some good stuff over at Fortune. Try this piece on other potential suitors for a good lay of the land, and this one on why the deal doesn’t make a lot of sense.
The Federation Is Dead
Ignore commentary to the contrary. Berkshire Hathaway.
This is Tucci’s swan song. He gets to sell his pride and joy to someone he likes, rather than having it broken up and sold for scrap because of activist investors. The structure will be preserved temporarily as a fig leaf to cover Tucci’s embarrassment for having to bow out in this fashion.
Note the repetition of the word ‘synergies’. Synergies is a word trotted out to provide post facto justification for whatever the executives wants to do, and they are highly dependent on the assumptions used to calculate them. You don’t get synergies by keeping things separated, so there will be consolidation. The talk is of revenue synergies of three times the cost synergies, which implies cross-selling versus cost-cutting, but there will be plenty of both.
All Dell, All The Time