Dell sell-off saga gets weird: Subsidiary VMware may buy parent in 'reverse merger' Dell's future has been thrown for yet another loop. Dell's virtualization subsidiary VMware is reportedly looking to buy out its parent Dell so that the tech titan can avoid a second IPO. Under a proposed scheme, the fake computer slinger would take over a real computer maker. Dell picked up VMware when it finally acquired EMC …
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Back when Dell (the company) went private Dell (the person) was full of promises about how once they were free of the chains of public ownership they'd innovate like crazy, Dell (the company) had all these breakthrough products in the oven that would soon be released to transform the business and return it to the glory days.
Years later and we're still waiting for these revolutionary products, all they have produced is a series of failed ideas, boring PCs and a huge takeover that saddled Dell (the company) with an even bigger mountain of debt than they had already. Now the prospect of more financial trickery looms in the hope there are still suckers out there prepared to finance this long con for a bit longer and allow Dell (the person) and his partners to ready their personal lifeboats.
Wrong revolution. Michael's innovations are strictly financial. He's the guy who figured out how to sell a PC for less than it cost to build and still make a profit. No mean feat, there. So this kind of machination is right up his alley, and he probably could make it work.
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If they have to jump through these kinds of hoops, all it says is DellEMC took on too much debt. The market will respond in kind and smack both DellEMC and VMware.
VMware exists only because they are hardware agnostic. Joe Tucci understood as much when he immediately spun VMware off at the time EMC acquired VMware.
Personally, I think DellEMC should stand or fall on its own - Dragging VMware down is just plain greed?
I must be missing something somewhere, but I was under the impression that the entire point of an IPO was to get paid money in exchange for the new shares you've just created. If instead you get pretend-bought by a subsidiary you already own whose shares already exist, no new money is actually added to the system. So what exactly is the point? Dell wants to do an IPO to bring in money to pay off some of their debt, but now they've come up with a convoluted scheme which will result in them not actually making money or paying off any debt instead, but which will still come with the downside of being beholden to shareholders instead of free to do whatever they want. I just don't get it.
IPOs make investment bankers rich and have lots of rules and regulations requiring heaps of lawyers who also get rich. Selling some of the 80% of VMware EMC own would be straightforward and bring new money into the system.
I think the tax changes around interest deductions have awoken this whole thing.
I still remember a comment from a business finance course I took many years ago that Dell was a bank with a computer manufacturing facility strapped to its side. At that time, Dell made its money on the float between the time it charged the customer and the much later time when they actually paid their suppliers.
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