First Read

A first take on enterprise IT technology news and events.

A Private Dell and the Public Markets

The $67 billion bid to buy EMC will include publicly traded VMware, and comes after speculation about Dell preparing to spin off SecureWorks.

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After taking his namesake company private in a hotly contested $25 billion buyout in 2013, CEO Michael Dell was outspoken in his happiness about no longer being a publicly traded company beholden to thousands of shareholders, needing to answer questions from financial analysts during quarterly earnings calls and having to worry about the "90-day shot clock."

"We can operate more aggressively, sort of attack in a disproportionate fashion," Michael Dell told eWEEK during the Dell World 2013 show, just weeks after shareholders approved the buyout deal. "We said on Feb. 5, when we announced the transaction, we were going to be aggressive and gain share, and that's what we're doing. It's harder to do as a public company because you have to balance these short-term earnings. Listen to the conference calls of any of these companies, and you have these investors and analysts asking, 'How come this?' or 'How come that?' or 'Blah, blah, blah …' No, thank you. All done with that. We don't need you guys. We're done."

Almost two years later, and Michael Dell took questions from analysts and journalists during a conference call about his $67 billion bid to buy storage giant EMC, a move that includes acquiring VMware, the publicly traded virtualization pioneer in which EMC holds an 80 percent stake. The deal was announced Oct. 12, more than four months after initial reports surfaced about Dell officials' interest in possibly spinning out at least part its SecureWorks security business, with an IPO for the unit bringing in as much as $1 billion.

During the call, Michael Dell was a little less strident about the market, noting that in 1988, with his PC business growing 80 percent a year, going public was a good way to raise the money needed to meet the demands brought on by the growth and to "accelerate the transformation" of the company. He declined to comment on speculation regarding any of its businesses, but did say VMware would remain public.

"I do think there is a role for the public markets," Michael Dell said. "But we're enjoying life as a [private] company."

Going private enabled Dell to aggressively pursue long-term growth initiatives that might not yield quick returns, something that would be difficult to do as a public company. EMC Chairman and CEO Joe Tucci said such flexibility was something that also could benefit his company.

"There's nothing wrong with being public or private," Michael Dell said.

Charles King, principal analyst with Pund-IT, wrote in a research note that EMC's being folded into a private company could be a blow to investors.

"The fact is that this is the second time in three years that one of the tech industry's top five vendors is exiting public markets for private ownership," King wrote. "Have investors' and financial analysts' expectations exceeded common sense? Perhaps. Will Dell and EMC be better off together than apart? Probably so. But if Dell's offer succeeds—and absent a major challenge, it likely will—the available options for technology investors will have become notably poorer."