Partners Hail Dell $24.9 Billion-Buyout Completion As Channel Game Changer
By Steven Burke, CRN Tue. Oct. 29, 2013
Solution providers Tuesday hailed the completion of Dell Chairman and CEO Michael Dell’s $24.9 billion buyout of the company he founded as a direct sales PC builder 27 years ago in his dorm room as a channel game changer.
Dell partners see the Dell and private equity player Silver Lake Partners’ completion of the deal as opening the door to faster sales growth for the company and for the channel.
Partners, in fact, said they see Michael Dell moving quickly to drive a bigger enterprise computing and channel footprint for the company. They expect the private company, under Dell’s leadership, to deliver more innovative products and services at a much more rapid rate than it could have as a publicly held company.
Trading in Dell’s common stock on the Nasdaq market will end at the close of the market on Tuesday with Dell shareholders receiving $13.88 per share in cash. Dell has already begun the process to delist its common shares from Nasdaq.
Michael Dell himself, appearing at the recent BoB channel thought leadership conference, told solution provider partners that the $60 billion company could grow its $15 billion channel footprint from about one-third of the company’s global commercial sales to as much as 60 percent of sales with no limit set on just how big the channel business could grow in the future.
[highlight type=”one”]Bob Venero, the CEO of Future Tech, a Holbrook, N.Y.-based solution provider, No. 266 on the SP500, said he sees a private Dell driving its channel business from just $15 billion to $30 billion over the next three years.[/highlight]
[highlight type=”one”]”This is a great day and victory on many fronts,” said Venero. “It’s a great victory for Michael who can now take Dell from the company that it is today to the company that it can be and will be tomorrow. This is going to mean more channel engagement, more channel growth and a deeper strategic alignment between the company and partners. At the end of the day, it is going to mean growth for Future Tech with Dell. Michael went from zero to $15 billion in the channel in five years. With a more nimble and energized company, that is going to grow exponentially. Dell has already made the steepest climb. Now that the channel engine is running, there is no question that number can go to $30 billion in three years.”[/highlight]
[highlight type=”one”]Venero and other partners rejoiced that Dell was able to beat back a bitterly contested six-month challenge from corporate raider Carl Icahn, saying if Icahn was successful, the company would have floundered without Michael Dell at the helm.[/highlight]
[highlight type=”one”]”Icahn had no interest in supporting the customers, partners or employees of Dell,” said Venero. “Anytime the bully in the schoolyard gets his butt kicked is a great day. There is no better leader for Dell than Michael. This is going to allow Dell to be a lot more nimble, to react quicker and to focus strategically rather than tactically … on stock-holders in 90 day time frames.”[/highlight]
Jed Ayres, the senior vice president of partner management and marketing for MCPc, the $262 million Cleveland, Ohio, national solution provider ranked No. 89 on the SP500, said he is “thrilled” that Dell is now a privately held company.
“We were all rooting for Michael,” he said. “This is awesome! It allows Dell to look past 90-day windows and start thinking about the business in a much longer cycle from … a customer, technology and partner perspective. This is an inflection point that is going to give Dell a competitive advantage.”
That competitive advantage is going to spark even greater growth for partners like MCPc, whose Dell sales are already up 50 percent compared to one year ago, said Ayres.
Dell has put together a 22-member national partner program, which Ayres said he views as the best of all the major vendors including Hewlett-Packard, Cisco and NetApp. “I believe the Dell program is the richest and gives us the best support and ability to plan of all the major vendors,” he said.
The Dell program puts growth targets on each segment of the business from client to servers and storage and provides national partners with lucrative rebates with 50 percent of those payouts reinvested back into the partnership, said Ayres.
Ayres said he sees a private Dell moving even more quickly to build out a channel offering that is more strategically aligned with partners and offers more detailed account mapping and planning. “Dell is aligning with us in a much more meaningful way,” he said.
Partners credit Dell with driving a dramatic change in the direct sales culture at Dell with an influx of new channel talent including the appointment of Frank Vitagliano, a 40-year channel veteran who joined Dell six months ago as vice president of channel sales.
Michael Goldstein, president and CEO of LAN Infotech, a Fort Lauderdale, Fla., channel partner, said he sees big new channel investments coming from Dell now that the company is private. “It’s coming right from the top from Michael,” he said. “And bringing talent like Vitagliano to the company shows the channel commitment.”
Besides deeper channel investments, Goldstein said he expects a stepped up pace of acquisitions aimed at delivering more rapid product and services innovation. “Michael has always been a great innovator,” he said. “You are going to see more acquisitions with the company moving quicker.”
One sign of innovation at Dell, said Goldstein, is the new Dell PowerEdge VRTX midmarket SAN in a box. “VRTX is a phenomenal product,” he said. “I don’t think anyone has anything like it. It’s a great start. We’re looking forward to seeing more products like that.”
