Michael Dell promises greater investment in PCs and tablets
In his quest to take the company private, the Dell CEO says he'll spend more money on PCs and tablets, hire more salespeople, and compete more aggressively overseas.
Michael Dell has revealed more details about his plans for the company if and when it goes private.
A memo from the Dell CEO to employees was included yesterday in a filing with the Securities and Exchange Commission and outlined a slew of costly promises for a restructured Dell.
One such promise is to invest more in PCs and tablets. Like many PC makers, Dell has tried to carve out a large chunk of the corporate market with servers, network gear, and other IT products. Michael Dell noted last year that the company has become more focused on IT services.
The consumer business still holds value as it accounts for a slightly larger majority of Dell's overall revenues. As such, the CEO wants to spend more money on PCs and tablets to increase sales and better compete with rivals.
Still, the corporate market contributes a healthy portion to Dell's revenue, especially at a time when PC sales are down. So Michael Dell envisions greater investment in this area. He wants to hire more people to focus on IT services, research & development, and sales. And he's eyeing some potential acquisitions.
"Dell's strategy of becoming an integrated provider of end-to-end IT solutions is expected to require additional investments in converged infrastructure solutions, software, cloud solutions, application development and modernization, consulting and managed security services," the memo stated. "In addition, it is likely that we will need to make additional acquisitions to complete our transformation."
Dell also wants to hire more salespeople in general and increase training for both new and existing salespeople.
Yet another promise is to compete more aggressively in emerging markets. The Dell CEO wants to spend still more money to compete in Brazil, Russia, India, and China and to expand its presence in Asia, Latin and South America, Central and Eastern Europe, the Middle East, and Africa.
Finally, Dell wants to make things easier for customers, another initiative requiring yet more money.
"We believe this initiative will make it easier for customers to do business with Dell, eliminating friction and complexity, and enabling more rapid response to customer needs," the memo explained. "We expect to make significant operating expense and capital expenditure investments to accelerate this effort, which should yield improvements throughout the value chain, eliminating unnecessary complexity from our solutions, go-to-market, premium support, online sales and support, procurement and supply chain."
Michael Dell's strategy requires a healthy amount of cash investment. But the CEO asserts that going private will take one thorn out of the company's side. A private company can spend money without having to worry about showing a profit on Wall Street every quarter.
In February, Dell revealed the $24.4 billion buyout plan in which Michael Dell and Silver Lake Partners would team up to acquire the company with help from a $2 billion loan from Microsoft.
The move to go private has hit a few stumbling blocks along the way. Last month, asset management firm Blackstone swooped in with a more lucrative offer. That was then followed by a buyout offer from activist investor Carl Icahn.
Michael Dell, his advisers, and the board must now weigh the various offers before them. He reportedly would support a buyout from Blackstone, but only if he continues as CEO.