In the middle of the summer, Dell Inc. announced its plan to acquire VMware for US$67 billion.
This would be a move that would create a new company with revenues of US$46 billion from software and cloud-related products,
as well as hardware mostly focused on servers and PC’s.
The deal was supposed to happen in October 2016 but it was revealed a month before the takeover
that VMware planned to pursue a buyback option, so they can break free from being owned by Dell.
The buyback option will be available to VMware’s shareholders starting on August 16.
However, they don’t have the money to do this.
The funds needed will come from the sale of Dell’s software division, which includes EMC and VMware, and has a market value of US$22 billion (Reuters 2016).
I believe that this is a massive screw up by VMware CEO Pat Gelsinger and his management team.
One of the reasons why I say that is because he insisted that Dell can run VMware better than any other company.
This move by it seems like a desperate attempt to kill its chances of getting bought by anyone else (Reuters 2016).
Although Dell is great at running companies and running servers and hardware,
it seems like VMware wants to avoid the trouble of having to work with Dell.
This move by VMware is a major screw up and it shows that the company needs help.
There are plenty of people who can run VMware better than anyone else, including their CEO.
This is one of the reasons why I’m convinced that Dell has no interest in buying VMware right now.
It would take a lot of work for CEO Pat Gelsinger to turn things around just because Dell doesn’t want to be controlled by anyone else.
He should take some time off from trying to change things around …
This blog post shows that VMware is in a hard place, even though the company is one of the leaders in the virtualization industry.
However, this post helps prove that their revenue has not increased since 2008.
I believe it is safe to say that they are currently on their way down. This means they will need more funding to get away from Dell.
It seems like this deal with Dell is more of a suicide pact than anything else (Reuters 2016).
After looking at these two sources, it becomes useful to look into how Dell has performed in recent years.
Dell plans to create a new company that includes EMC and the Dell Technologies Group.
This is what will happen when they take over VMware:
The new company will be called Dell Technologies, which means that Dell Technologies will be the new top dog in the industry (Dell 2016).
Eaton Vance Corp. and JPMorgan Chase & Co. are expected to get a stake in this new company (Reuters 2016).
The deal has been approved by both companies’ shareholders and both of their boards of directors (Dell 2016).
The merger is set to complete on September 7, 2016 (Reuters 2016).
The purchase will help Dell avoid the trouble of losing money (Reuters 2016).
Dell would receive VMware’s earnings (Reuters 2016).
Dell is expected to save US$3 billion in the first three years of owning VMware (Reuters 2016).
Analyzing these statements, it becomes useful to discover what Dell is hoping to achieve with this deal.
The new company will be called Dell Technologies, but it will include two subsidiaries: EMC and the Dell Technologies Group.
Once the deal is completed, there won’t be much of a difference between Dell and VMware.
Instead, they will be known as one big company. Obese Tuber
This merger seems like it was designed just to avoid troubles for both companies.
The only thing that Dell will gain from this deal is the earnings from VMware.
This is actually quite shocking because Dell usually focuses on hardware-related products,
but they have made it clear that they are trying to expand their business towards software and cloud-related products.
That being said, I believe that this deal with VMware will help Dell get out of the spot
they are in because the company has lost money ever since 2013 (Reuters 2016).
This is one of the reasons why I think it’s fair to say that VMware had no choice but to sell itself off to Dell.
The company was making millions of dollars annually in profit at one point, but that all changed once 2008 hit.
They have been on a downward spiral ever since 2008.
This is mostly because the company has had a hard time competing against Google and Amazon.
That being said, it seems like VMware was going to try and gain some traction sometime in the future by working with Dell.