One Dell of a Ride

Michael Dell founded Dell in Austin, Texas 1984. As a student he initially ran the company from his dorm. In just four years, Dell was able to file for IPO in 1988.

Dell continued on a growth trajectory, hitting $1bn in revenue by 1994 and launching its online shop Dell.com in 1996. Within six months online sales reportedly generated $1m in sales per day.

However, it wasn’t all smooth sailing. Dell himself was removed as CEO and the company struggled at times to meet the expectations of the market.

In 2013, with Dell back in the CEO seat, he partnered with Silver Lake Partners to take the company private for $25bn. A figure, many analysts said underpaid shareholders.

By taking the company private, Dell was able to restructure and make changes without having to worry about the market or shareholders. In its attempts to carve out a leaner business, Dell has shed some divisions that didn’t return, notable Perot Systems, Quest Software and SonicWALL.

While it was shedding low-return divisions with one hand, Dell announced a deal worth $67bn with its intention to acquire EMC – the biggest technology integration ever.

However, an integration of this size is not a simple case of signing an agreement, shaking hands, and wiring some money. EMC is a hugely complex company in its own right; made up of several independent companies. Some of which trade independently, such as VMware. Other key components of EMC include Pivotal and RSA.

Looking at EMC, Dell may want to offload some divisions. Documentum, much like Veritas within Symantec was never a natural fit – so could be a candidate to go.

The combined Dell and EMC entity – named Dell Technologies, is estimated to be worth around $74bn in revenue with 140,000 staff. With this considerable horsepower and private status, Dell could choose to delve into the hottest technology markets through R&D or acquisition.

The figures look convincing on paper. But acquisitions – even small ones can get messy quickly. Few companies manage a truly successful integration when there’s only a technology component. Dell still has financial and regulatory challenges to overcome in the process.

Looking ahead, one thing can be sure that the ride is far from over for the company Michael Dell founded in his dorm.

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