HP Enterprise's Whitman pans Dell's EMC purchase over debt
The fear uncertainty and doubt game is well underway as HP Enterprise CEO Meg Whitman took aim at Dell's $67 billion EMC purchase.
Whitman's take, which isn't surprising given rivals have been teeing off on HP's split into an enterprise unit and one focused on PCs and printers, is likely to be echoed by other Dell competitors.
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The issue is whether smaller companies benefit enterprise customers better than one massive one based on one throat to choke. We'll let Whitman do the talking. Here's her memo to HP Enterprise employees.
To: All Hewlett Packard Enterprise Employees
You probably saw the news earlier today, Dell announced that they would acquire EMC for $67 billion. I wanted to take a quick moment to tell you why I (and you should too) believe this is a good thing for Hewlett Packard Enterprise and an opportunity for us to seize the moment. This is validation for the strategy that we have laid out and I am not surprised that others would try to emulate it. But, the reality is that we are two years ahead of the game and it will be difficult for others to catch up.
First, let me give a little context. To pay back the interest on the $50 billion of debt that the new combined company will have on their balance sheet, Dell will need to pay roughly $2.5 billion a year in interest alone. That's $2.5 billion that they will allocate away from R&D and other business critical activities, which will keep them from better serving their customers.
Second, integrating EMC and Dell, which combined have more than $75 billion in revenue and nearly 200,000 employees, is no small feat. This will be a massive undertaking and an enormous distraction for employees and their management team as two very different cultures come together, leadership teams shift and an entirely new strategy is developed.
Third, bringing two portfolios together will require a significant amount of product rationalization, which will be disruptive to their business and create confusion for their customers. Customers simply will not know if the products they are buying today from either company will be supported in 18 months.
Fourth, this move is going to cause chaos in the channel as they bring together two different programs and approaches.
All of this at the very moment when we have completed our journey to create two new, focused companies. We're organized, we have a strong balance sheet and our innovation engine is humming. So, get out in front of your customers and your partners. Tell them our story. Take advantage of this moment.
Best,
Meg