Partners: Dell's Potential Spinout Of SecureWorks, Boomi 'Not A Distraction'

For Dell, spinning out Boomi and SecureWorks, as suggested recently by Silver Lake Partners -- the private equity firm that owns about 25 percent of Dell -- could be a good move, partners say.

At a recent Fortune event, Silver Lake managing partner Egon Durban praised EMC's "federation" strategy, and said Silver Lake and Dell are considering spinning out or combining certain high-growth businesses similar to the way EMC treats its federation companies.

In an interview with Fortune at the event, Durban specifically mentioned cloud software integrator Boomi, which the Round Rock, Texas-based Dell acquired in 2010, and SecureWorks, a cybersecurity business Dell bought in 2011 for $612 million, and which has been the subject of IPO rumors for years.

[Related: Dell's Ganthier: 'Software-defined Is Kryptonite To Cisco']

Dell declined to comment for this story.

Partners reached by CRN said the spin-outs seem to make strategic sense.

"I would say SecureWorks is an independent entity anyway," said Paul Neyman, president of Houston-based Waypoint Solutions. "They collaborate with Dell, but they always seem to be their own beast."

Likewise, Boomi is independent enough that it doesn’t seem to interfere with core Dell infrastructure business, Neyman said.

"I'd rather see Dell stay focused on infrastructure, but I don't think Boomi is a big distraction," Neyman said.

Stephen Monteros, vice president of business development and strategy at Ontario, Calif.-based Dell partner Sigmanet, said it makes sense for Dell to spin out SecureWorks and Boomi because they've never been a perfect fit for Dell or partners.

"SecureWorks and Boomi are outside the box, and it's a bit of a struggle to get them integrated and get partners on board," Monteros told CRN. Dell "has spent some time with us, we've put some time into it -- it's just slightly awkward."

"For us, they've struggled a bit to integrate SecureWorks," Monteros said. "They have a different go-to-market strategy, a different model. They've been working hard, but it's kind of outside the box. They're not really integrated. And SonicWall is already in the stack, which aligns really well."

Since spring, it's been rumored that Dell intends to spin out a minority stake in SecureWorks in an IPO this year, according to 451 Research. This week, the Atlanta Business Chronicle reported that multiple sources had confirmed the IPO, saying it could bring a valuation of more than $1 billion.

Silver Lake invested $1.4 billion in Dell's $25 billion buyout in late 2013. CEO Michael Dell invested $4.2 billion in the transaction. Durban sits on the Dell board of directors. Silver Lake owns about 25 percent of the company. Michael Dell owns 75 percent.

Durban told Fortune that EMC's federation strategy, in which the company tries to unify EMC Information Infrastructure, VMware, RSA, VCE and Pivotal, is a good way to realize value in a disparate portfolio.

’I think what [EMC CEO Joe] Tucci has done with VMware is a good example of that, where you can take something that people don’t fully understand, buried in the portfolio, and unlock it while still having a partnership with the mother ship,’ Durban told Fortune.

However, EMC, which is publicly traded, has been under pressure from activist investor Elliott Management to break up the federation in order to maximize shareholder value.

PUBLISHED JULY 27, 2015