Dell CEO Michael Dell wants to make sure there is no misunderstanding about what his company’s $24.4 billion private equity bid means to solution provider partners.
When Michael Goldstein, president and CEO of LAN Infotech, a Fort Lauderdale, Fla.-based Dell partner, expressed reservations about the deal in a Wall Street Journal story that hit the Web on Sunday night, Dell called him directly to address any and all concerns about the deal.
“Before his call I was worried about how it would affect us,” said Goldstein, who was attending UBM Channel’s XChange Solution Provider conference in Orlando, Fla., when he got the unexpected call from Dell about 7:15 p.m. Sunday night. “After speaking with Michael, I am comfortable with the deal. As a private company, Dell will be able to expand quicker and make deeper investments in technology and the channel. This is all about building a stronger Dell. This further strengthens my thoughts on sticking with Dell. We are all in with Dell.”
Goldstein, who spoke with the Dell founder and CEO for about 25 minutes, said it is important for Dell’s CEO to continue to speak with partners and customers on the deal. “Everyday you see something different on this,” said Goldstein. “I think it is real important that Michael [Dell] reaches out.”
Goldstein isn’t the only one the Dell founder is reaching out to in what is shaping up to be an epic battle to take the company private in the wake of objections from activist investor Carl Icahn and major Dell shareholders like Southeastern Asset Management. Icahn Monday entered into a confidentiality agreement with Dell in order to review the Dell private equity bid.
Sources said Michael Dell, who founded the company 29 years ago, is reaching out to dozens of customers and partners to make sure the company does not miss a beat as it moves to close the private equity deal.
Dell partners, for their part, say Dell’s bid to take the company private will pave the way for Dell to make bigger investments in research and development, channel sales, and services as well as make additional acquisitions that will strengthen the Dell enterprise solution and services portfolio. What’s more, they say, Michael Dell’s vision and hands-on involvement in accelerating the company’s transformation from one-time desktop kingpin to full enterprise solutions company is critical to the private equity bid.
[highlight type=”one”]Bob Venero, CEO of Future Tech, a Holbrook, N.Y.-based solution provider, spoke with Dell on Monday and said he is certain Dell will flourish more readily as a private company focused on the end-to-end solutions rather than a publicly held company trying to meet short-term sales and earnings targets. He sees Michael Dell’s fiery entrepreneurial drive as being better suited to a privately held company.[/highlight]
[highlight type=”one”]”The passion, drive and dedication that entrepreneurs like Michael [Dell] bring is best suited to a private company,” said Venero. “Michael is trying to unshackle himself from the public investor so the company can make investments for the future. Going private is going to provide him and the company the ability to invest in the longer-term opportunities that are going to reap much better rewards for customers, partners and Dell itself. We have been behind this [going private bid] 200 percent from the beginning.”[/highlight]
[highlight type=”one”]Future Tech’s Venero said Dell is actively speaking with customers and partners about the benefits of the Dell transformation.[/highlight]
[highlight type=”one”]”Michael [Dell] is making sure everyone understands his vision,” said Venero. “The message to me is very clear. It is what it has always been. We talked about it on the phone again today. It is innovation, growth, enterprise solutions and to be that turnkey, end-to-end provider aligned with the customer and partner set.”[/highlight]
[highlight type=”one”]Venero, whose Dell business was up 400 percent in 2012, said Dell himself recently met with a large Future Tech customer and wowed the client. When Venero asked for an email response on the meeting, the client replied: “It was awesome,” said Venero. That kind of ability to win over customers and partners is key to Dell’s success. “That awesome response is a credit to what Michael did in that meeting,” he said. “He showed the customer Dell is the right technology and business solutions partner for them.”[/highlight]
One executive close to the Dell private equity bid said he sees the Dell founder’s “commitment to the business” and the ability to make significant new investments as key to accelerating the company’s end-to-end solutions transformation. “Going private allows Dell to spend more on R&D, add more salespeople, acquire more companies. It means Dell is going to get more aggressive,” said the source who requested anonymity. “Most of the partners are private companies, they know what it means to be private. If you look at the last five years, Dell has built a very substantial end-to-end solutions business with software and services. Dell’s channel and partner relationships have grown tremendously. This will continue, and in fact, this go-private transaction will just accelerate the company’s transformation. The only ones that don’t like this are the competitors because it will make Dell more competitive.”
A source inside Dell said the company will lay out some of the company’s aggressive plans from the privatization bid in a proxy that will be released shortly after the go-shop period ends on March 22. “People have speculated that maybe Dell is getting out of this business or getting out of that business, or they are not going to do PCs anymore,” said one source inside the company who spoke under the condition of anonymity. “That is all nonsense. This is all about growth. This will allow us to make investments that in the short term would reduce the earnings of the company but are intended over the long term to grow the company’s revenues substantially. We are building lots of new capabilities and that requires investment.”
The Dell insider said the company will not only make big new investments in additional software and services but also continue to invest in client devices including tablets and PCs. “What we found is that hardware by itself was insufficient to be able to solve the challenges and opportunities that our customers have presented us, and so together with our partners, we built this whole range of end-to-end solutions,” said the Dell insider. “That is why you have seen us aggressively expand with $10 billion worth of acquisitions, data center, systems management, security, services. You put all of that together and we have a very, very broad set of solutions that dramatically expands the available market for us.”