By Mark Haranas, on CRN.com Feb 2, 2018
Dell Technologies CEO Michael Dell shined the spotlight on double digit global channel sales growth in a filing with the Securities and Exchange Commission to highlight Dell’s success as the industry titan considers filing an IPO or merging with VMware.
“Our partners believe in what we’re doing with Global Channels revenue up double-digits in first half of FY18,” said Dell in an 8-K filing with the SEC on Friday. The global channel sales growth is for the six month period ended Aug. 4, 2017.
“We have leadership in 13 Gartner Magic Quadrant reports. We are the leaders in 24 IDC market share categories,” said Dell. “Our customers believe in what we’re doing with 91 percent saying Dell and EMC have delivered on their pre-merger promises.”
Dell said since closing its $67 billion acquisition of EMC, “it’s clear that the largest merger in IT industry history has been a success.” He added that VMware has “enjoyed tremendous success” since joining Dell, delivering innovative new solutions and double-digit sales growth.
Robert Keblusek, CTO of Sentinel Technologies, a Downers Grove, Ill.-based solution provider ranked No. 117 on the 2017 CRN Solution Provider 500 list, said his Dell EMC and VMware sales increased substantially in 2017 year over year “We’ve done a lot of business around Dell EMC and VMware – they have some of the best in class products across the board,” said Keblusek.
Michael Dell confirmed on Friday that his company is currently evaluating an initial public offering (IPO) or a merger with VMware.
Bob Venero, CEO of Holbrook, N.Y.-based solution provider Future Tech, No. 119 on the 2017 CRN Solution Provider 500, said he sees a full integration of VMware into Dell as a “natural evolution” that would ultimately lead to a combined channel program.
“If the reverse merger happens, the VMware program will be integrated into the EMC program giving more benefits and incentives for partners selling both Dell and VMware,” said Venero.
Beside increased incentives for selling both Dell and VMware portfolio together, the combined channel programs would also reduce total cost of sales for partners who must closely track separate sales and profit and loss statements for each vendor, he said.
“Anytime you have an integration of multiple organizations from a partner strategy perspective there is definitely going to be value for partners not only from the combination but also in the reduced cost of sales,” said Venero. “If you combine both program you don’t have to worry about managing two separate channel programs. Having them under one umbrella obviously makes things easier for the partner community. Tracking the channel programs from separate vendors is definitely a labor intensive process. If you consolidate the programs you reduce your labor and your cost of sales.”
The potential IPO and merger scenarios were triggered by the passage of the federal Tax Cuts and Jobs Act bill which was passed by Congress in December. The bill limits the tax deductibility of interest payments to 30 percent of a company’s earnings before interest, taxes, depreciation and amortization (EBITDA). Dell currently has approximately $50 billion in debt stemming from its $67 billion acquisition of storage market leader EMC in 2016.
Michael Dell said he believes any impact of tax reform for Dell “based on what we know today, will be more than manageable.”
He added that Dell is in “excellent financial condition” with the Round Rock, Texas-based behemoth repaying $10 billion of gross debt since the close of EMC in 2016.
“Nothing has been decided and alternatives are just being considered at this stage. While this process continues, it is business as usual for team members, customers and partners with no changes to current structures, practices and processes,” said Michael Dell. “For my part, I remain completely committed to our mission and extremely excited about the opportunities ahead.”