Dell Technologies One Year In: How Are They Performing And How Did They Do It? Forbes Nov 28, 2017


Michael Dell, chairman and CEO of Dell Technologies (AP Photo/John Locher)


If you look at the largest tech mergers and acquisitions, there have been mixed results, some positive, most negative. When I say that, I’m talking about AOL-Time Warner, JDS Uniphase-SDL, HP-Compaq, Verisign-Network Solutions, JDS-E-Tek, HP-EDS, Oracle-PeopleSoft, Symantec-Veritas, and Compaq-DEC. Given past megamerger failures, many were understandably skeptical when Dell started talking about buying EMC back in 2015—especially considering it was, and still is, the largest tech deal ever at $67B. I’d like to spend time on this blog assessing how the first year went and how they did it. Overall, it appears Dell is managing to pull it off and doing it with style.

Accomplishments so far

Dell Technologies is the world’s largest privately controlled tech company regarding many metrics. Last fiscal year it boasted $74B in revenue, with over 140,000 employees, 30,000 full-time customer service, and support team members, located in 180 different countries. While the full fruits of the Dell EMC deal will be coming down the road, it’s important to look at what Dell Technologies did within the first year of getting the deal done.

FY’18 Q2 is a good representation of how the company is doing financially, and results were impressive, with a posted revenue of $19.3B, and a $1.8B cash flow. When you are private, gross profit margin percent doesn’t mean anything, but cash is king.

While critics of the initial merger worried whether Dell could climb out of the debt it would incur, the new company has already paid down $9.5B, driven in part by free cash flow and the sale of Dell Services, Software and Enterprise Content totaling $5.3B. Dell EMC has been firing on all cylinders across many fields, gaining share in PCs, servers, HCI, and storage, and making impressive headway in IoT, data protection, and AR/VR. The Dell client group is doing very well as I illustrated in this recent article

I highlighted that “the company’s global PC share grew for the 18th consecutive quarter (from 15.9% to 17%), and Dell’s overall shipments grew 3.7% year-over-year (aided in part by an unusually strong notebook showing). While not the #1 unit share lead, Dell does lead in commercial revenue share. The other big news is that Dell managed to surpass HP Inc. to reclaim the number 1 position in total global workstations share.”  All this and Dell client group brought in $566M in Q2 operating income.

Dell also completely revamped their channel program, led by John Byrne, and is now a $35B business, adding 10,000 new accounts and growing at over 3X industry rates.

Probably the best metric given the history of loser mega-mergers was that an impressive 91% of customers surveyed believe that Dell EMC has delivered on its pre-merger promises.

The rest of the story here -