Dell enters the exchange and heads for a hybrid cloud

    In one of our materials, we said that Dell plans to become a public company and place shares on the exchange for the first time in five years. At the beginning of this week , the date when Dell's securities came into circulation became known , December 28th. At the same time, the IT giant announced that it would embark on the active development of a hybrid and public cloud. Let's tell you what the point is.

    / photo by Dell Inc. CC BY-SA

    Briefing on shares

    Before turning to projects that are planning to develop in Dell, we will explain why the company needed to become public. The fact is that Dell has a debt in excess of $ 50 billion. He appeared after Michael Dell borrowed money to buy EMC three years ago. Since then, Dell has been trying to repay this debt.

    To eliminate the problem, Dell decided to become a public company, but without an IPO (this will save on all sorts of bureaucracy). This would allow the company to additionally attract third-party investments. Management considered two scenarios. The first involved reverse-takeover with a VMware subsidiary. But this option had to be abandoned, as it did not suit the shareholders and investors. We wrote more about this earlier in our blog on Habré .

    The second scenario is associated with the reorganization of stock stock VMware. The idea is to buy targeted (tracking) stocks from VMware and put new Dell securities on the market.

    Negotiations on this issue lasted for five months. And last week there was a vote of shareholders who approved the deal. Tracking shareholders will be able to sell their assets for $ 120 or exchange them for new securities. Thus, the IT giant will become a public organization without an IPO.

    After the public offering of shares, Dell plans to actively develop technologies of hybrid and public clouds.

    Cloud Course

    Hybrid clouds will become one of the leading destinations for Dell in 2019. Dell plans to develop it with the help of the same VMware.

    Since the beginning of 2018, VMware has acquired three cloud startups: CloudHealth Technologies, CloudCoreo and Heptio. The first two will develop products that help companies manage business processes in the public cloud and control spending on cloud resources. As for Heptio, this is a company that develops solutions for deploying environments on Kubernetes. Analysts expect that Kubernetes may soon become the “standard” for sweeping hybrid environments in the cloud.

    In this case, Dell and VMware will continue to work on the development of systems that simplify the tasks of system administrators in data centers. In November, the tool for deploying a hybrid cloud and software data center VMware Cloud Foundation received integration with the hyperconvergent Dell EMC complexes - VxRail and VxBlock, created on the basis of vSphere and Virtual SAN. This functionality should more closely link Dell hardware and software products into a single ecosystem.

    In addition to VMware, the development of multi-cloud with Dell will be another subsidiary of the IT giant - Pivotal. While VMware will be developing server technologies, Pivotal will focus on software solutions. For example, in early December, Pivotal releasedopen source platform for serverless computing in a hybrid cloud - Pivotal Function Service. It is also based on Kubernetes.

    Community opinions

    One of the potential restructuring challenges is the deteriorating financial position of Dell and VMware.

    / photo Bruno Cordioli CC BY

    Under the terms of the transaction, the subsidiary is to pay dividends to shareholders in the amount of several billion dollars. Analysts estimate that because of this, VMware will remain in the red by the end of the year. Although it is expected that next year the company will become a plus, the financial deficit may affect the speed of developing new products.

    Another problem is the possible reluctance of investors to buy Dell shares. After the public offering, the controlling stake will be with Michael Dell, CEO of the company. Dell is known on the market for his desire to "get everything at once" and "aggressive behavior." This can scare off large investors, which will damage development plans.

    Although there are those who see positive sides in this whole story. According to one of the holders of trust shares and investor in the hedge fund Josh Wood (Josh Wood), the restructuring of securities holdings will help to unite the interests of shareholders of VMware and Dell. This will reduce leadership discrepancies and help companies come to a common vision for the future.

    Even before the official confirmation of the placement of Dell shares in Bloomberg wrotethat the company's customers will only benefit from the transaction. When software from VMware integrates with Dell hardware, users will be able to buy complete cloud solutions at a lower price. Therefore, Dell has every chance to create a single hybrid ecosystem for data centers and clouds.

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