Michael Dell gives first glimpse into future of EMC

Dell opens up on layoffs, management changes, VMware and debt burdens

When Dell announced plans to snap up EMC for $67bn yesterday morning, the long-running question of what would happen to the storage giant was finally answered.

Speculation about the company's future had been circulating for months, with a variety of possibilities rumoured to have been considered.

But as one big question finally got an answer, many more were raised following news of the planned acquisition.

On a media phone call yesterday, Michael Dell attempted to answer some of the most pressing questions about what is set to be the world's largest technology acquisition.

With Dell being private and EMC public, what is your philosophy on the public markets both now and for the future?

Dell: As we took Dell private a few years ago, it gave us tremendous flexibility and agility to navigate and we've had now 11 quarters in a row of gaining share. The company is doing well. I do think there's a role for the public markets to play - VMware will remain an independent company. Look, there's certainly a role for the public markets, we recognise [that], but we're enjoying life as a privately controlled enterprise, thank you very much!

In 1988 when our company was growing an 80 per cent per year, the only way to finance that growth was the public markets. There's nothing wrong with being public or private, it just so happens we have the resources and capabilities to be a private and that gives us great flexibility.

Dell has had to borrow significantly to fund this deal. How are you going to cope with that debt burden?

Dell: We have had great support from the banks and have a fully committed financing [facility] here. I think you're going to see in the first 18 to 24 months, significant deleveraging coming from some cost synergies. We have revenue synergies which are three times larger certainly than cash flows of the combined businesses together. We feel very good. In the first transaction [taking Dell private], we made rapid progress and we intend to do the same here.

EMC has a unique Federation model, encompassing VMware, RSA and Pivotal, as well as EMC Information Infrastructure. How does Dell see this model and what will happen to it in the future?

Dell: I can say we have certainly studied this carefully and gotten to know the organisation and how the Federation works. We look forward to enhancing that. Within Dell, we have some fantastic businesses we have been incubating ourselves: SecureWorks would be one, we have another called Boomi - a fast-growing data-integration company. So there are some great aspects to this structure and we come together as a combined company we will be even more powerful.

There will obviously be some overlap at EMC and Dell, so will there be layoffs? If so, in what functions or areas of the businesses?

Dell: There are certainly some cost synergies, we are not going to tell you that there aren't. But there are other companies in our industry which are far better at reducing headcount than we are, so maybe jump on their calls.

What about top management? VMware's Pat Gelsinger and EMC's David Goulden both have the title of CEO - what will happen to them?

Dell: We believe they both have a very bright future in the new combined company.

How soon will EMC become a Dell company?

Dell: We will have to wait for the transaction to close, obviously. Certainly we will be thoughtful about how we do that to make sure we do it in the right way. We have a history of working together in the past so that will accelerate our ability to bring solutions to customers in a faster way.