Hewlett Packard Enterprise CEO Whitman slams EMC/Dell deal
If anyone knows about integration woes, HP knows integration woes!
EMC/Dell deal HP Enterprise's CEO Meg Whitman has slammed Dell's acquisition of EMC.
In an email sent to “All Hewlett Packard Enterprise Employees” Whitman says the merger is “a good thing for Hewlett Packard Enterprise and an opportunity for us to seize the moment.”
Whitman says HP Enterprise is “two years ahead of the game” and that Dell is emulating HP's strategy.
The CEO goes on the attack with the following argument:
“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.”
Dell will indeed have to pay that interest. Just how Whitman knows the money will go from R&D or customer-facing activity is anyone's guess. Michael Dell is no dummy, so The Reg expects he'll be rather keen to keep customers on side and research moving at a crisp pace.
Whitman's letter goes on to say “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.”
HP's CEO is on safer ground here: Compaq may never quite have properly digested Digital, HP seems not to have made much of Compaq and the 2008 acquisition of EDS hasn't exactly produced a dynamo. And let's not forget the Autonomy acquisition, which looks to have been a mess even before the integration of culture and products.
Next on Whitman's hit-list is the complaint that “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.” That's a bad thing because “Customers simply will not know if the products they are buying today from either company will be supported in 18 months.”
Again, if anyone would know about that kind of mess, it would be HP.
Whitman's closer is that “this move is going to cause chaos in the channel as they bring together two different programs and approaches.”
Dell and EMC dispute this: on calls yesterday a recurring theme was that Dell's great in the mid-market and EMC's relationships with enterprises are stellar. Channels may therefore not be quite the problem Whitman suggests.
The HP CEO's letter concludes with the following:
“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.”
Or in other words, get out there and spread fear, uncertainty and doubt, my pretties! And whatever you do, don't mention Autonomy, the fact our own channel can't walk and chew gum at the same time or Whitman's own completely unfulfilled pledge to enter the 3D printer market by mid-2014, which in no way reflects on her record delivering on promises. ®