Dell eyes up further buys after EMC takeover

Computer giant Dell has formally completed its multi-billion dollar takeover of cloud computing and IT security group EMC, positioning the company to use its size to invest in new areas and fend off competition from the cloud and other rivals.

The combination of the two companies creates a $74bn business that serves 98% of Fortune-500 companies. It also takes EMC out of the glare of the public markets as the company is privately controlled.

The tie-up, seen as the largest technology deal in history and valued at about $67bn when it was first announced almost a year ago, brings together the leading provider of key storage products and one of the top makers of servers and personal computers as both companies grapple with rising interest in cloud-based services from rivals such as Amazon, Microsoft, and Google.

Dell plans to invest $4.5bn a year in R&D going forward after cumulative investments of more than $12.7bn over the past three years, the company says.

“We’ve got the ability to innovate at scale and invest — not for next quarter, but we have the agility and speed of a start-up, but the scale and reach of the largest company in the industry,” Dell’s chairman and chief executive Michael Dell said.

“Being private gives us an ability to focus on our customers like no other competitor can.”

Dell plans to invest in areas including products linked to the Internet of Things — or the effort to connect various devices, from cars to refrigerators.

“As you have this instrumentation and making everything intelligent — that’s a huge opportunity,” Mr Dell said.

“The PC and smartphone revolutions have reduced the cost of microelectronics to the point where these small computers, effectively, can be embedded in anything.”

The new company has 140,000 employees. While Mr Dell didn’t deny there could be job cuts, he said the tie-up was more about revenue growth.

“We have more, what I would call, revenue synergies than cost synergies because of the complementary nature of the businesses; we’re not putting together businesses that are the same — and taking costs out,” he said, declining to give any estimate for lay-offs.

“There are some overlapping functions and that sort of thing — that’s not the primary feature of this, but there is some of that.”


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