EMC and Dell begin to paint a picture of post-merger world

A raft of new solutions unveiled at EMC World this week are eclipsed by a rather large, Dell-shaped, elephant in the room

Dell and EMC revealed this week that their combined family of businesses will be called Dell Technologies.

Dell CEO Michael Dell used his keynote presentation at EMC World in Las Vegas to reveal the [not entirely innovative] new name.

“Our vision is a strategically aligned family of businesses that brings together customers’ entire infrastructure, from hardware to software to services, from the edge to the core to the cloud,” Dell said.

Dell Technologies will comprise the combined enterprise infrastructure businesses of Dell and EMC, the PC business and affiliated businesses including VMware, SecureWorks, Pivotal, Virtustream and RSA.

To confuse matters, there will also be two sub-brands. Dell EMC will be the name for the company’s enterprise business, while Dell will be the brand associated with the company’s client solutions for consumers.

EMC has used its annual conference to launch a smorgasbord of new products and solutions, all aimed at helping customers to modernise their datacenters, with a particular focus on flash. The firm launched its new Unity family of flash friendly storage systems, designed specifically for small, mid-sized and departmental enterprise IT deployments.

Elsewhere in the federation, Virtustream launched the Virtustream Storage Cloud (VSC), a hyper-scale storage cloud, built for large enterprises, service providers, and public sector organisations, looking to secure, manage, and store mission-critical data in the cloud.

But the torrent of new products announced in Vegas this week have fallen under the shadow of the pending merger and what it means for the two companies and their customers.

EMC chair and CEO Joe Tucci and Michael Dell took to the stage to wax lyrical about the deal, each other and storage in general. Dell said that a culture survey had been undertaken at both companies, which found their values to be well aligned. The CEO double act also claimed, with straight faces, that there was ‘very little’ product overlap between the two suppliers. 

One area that there certainly is overlap is security, with the likes of RSA, Pivotal, and VMware's NSX all in on the action. This was the main impetus for Dell taking its cyber unit, SecureWorks, public last week, which so far, has been a bit of a disaster.

The company's IPO marked the first US technology IPO of the year and ended the longest drought in seven years.

However, SecureWorks has, thus far, failed to rally the bruised technology IPO market, hovering around its opening price of $13.89, well below the anticpated range.

There are still a lot of hyper-scale mountains to climb for the mega-deal to go ahead. Dell still needs to find $57bn down the back of the sofa to complete the acquisition, EMC shareholders have yet to vote on the deal and the firms are still waiting for approval from Chinese authorities. 

On top of this, the Wall Street Journal recently reported that Dell can expect to pay a premium as it looks to raise the money for its purchase of EMC.

Dell is looking to to sell as much as $9bn of unsecured junk bonds to back the acquisition. With the bond market in tatters, analysts have said that the firm will likely pay an interest rate in the region of 10%.

Negotiations between Dell and debt investors aren’t likely to happen until after EMC shareholders vote on the takeover, which is expected to happen in June. 

Dell’s leverage, defined as its total debt over EBITDA, will be high after the acquisition of EMC, leading some analysts to believe that new unsecured bonds could merit interest rates as high as 12%.

This week however, all of the nitty gritty details have been put on hold. The executive team are doggedly optimistic that the merger will go ahead on schedule. So for investors, customers and channel partners, this is perhaps the most significant EMC World in years, as it provides some insight into what the world will look like post-merger.  

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