Tucci On Dell-EMC Deal: 'I Am Confident Deal Complexities Will Be Worked Out'

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EMC CEO Joe Tucci on Thursday said the $67 billion price tag Dell is paying for the storage market leader was a good deal for shareholders and expressed confidence that the "complexities" of the blockbuster merger will be worked out.

"Obviously there is letter stock, and there are complexities that I have every confidence will be worked out, but at the announced price I think it was a good deal for the shareholders," he told a crowd of Northeastern University students in a question-and-answer session hosted by Northeastern President Joseph Aoun in Boston.

Despite the $33.15 per share Dell bid, EMC shares closed at $26.16 on Thursday. Since the deal was announced, EMC market capitalization has dropped by $3.26 billion.

[Related: Joe Tucci: 10 Things You Need To Know About EMC, VMware, Virtustream And Dell]

Shares of EMC's VMware subsidiary, which will be mirrored by a tracking stock as part of the complicated deal, meanwhile, have fallen from $78.65 before the deal was announced to $58.52 Thursday. That amounts to a drop in market capitalization of $8.5 billion.

Hewlett-Packard CEO Meg Whitman this week told CRN that it is hard to evaluate the price of the deal given the movement in EMC and VMware stock prices. "It is hard for me to judge, because I am not sure exactly where this is all going to land relative to the current EMC stock price and the current VMware price," she said.

Jamie Shepard, senior vice president for health care and strategy at Lumenate, No. 145 on the CRN 2015 Solution Provider 500, said there is still a lot of uncertainty around the Dell-EMC deal.

"I am speaking with customers right now that have no clue as to how this will shake out," he said. "Right now, it is business as usual. For Lumenate, this is just another disruptive announcement in what has been an unprecedented IT revolution."

Ultimately the Dell-EMC deal is being driven by the cloud computing services revolution that is reshaping the IT landscape at a blistering pace, said Shepard. That is creating a new wave of opportunity for top cloud consulting companies like Lumenate, he said.

"This is just another part of the IT revolution, creating a much bigger focus for Lumenate to provide high-value consulting for our customers," he said. "We have more customers asking us to consult with them than ever before around the four Lumenate Ps: process, policy, people and product. It is no longer a transaction-based business. It is a transformation-based business."

Even with the uncertainty, Shepard sees the deal as "great" for both EMC and Dell shareholders. "A lot of EMC employees are going to make a lot of money here," he said. "Dell is also an organization that needed to create more value for their employees and shareholders," he said. "This creates more value for Silver Peak [Dell's top private equity investor]."

Tucci, for his part, told students that the decision to sell the storage market leader in the biggest deal in IT history to Dell came down to satisfying what he views as four key constituencies: shareholders, employees, customers and the community.

"As CEO, you have got several constituencies that you care about: You have shareholders, very importantly, you have your people, you have your customers, and then you have the communities in which you operate," he said. "So when you look at this deal through my lens as a CEO, ... I think it lit all the lights. I know that they have a great track record, and we have a great track record of maniacal focus on our customers and their success. So from my perspective, it lit the four lights I care about."

As for the impact on EMC's employees and the Boston community, Tucci pointed out that the headquarters for the combined enterprise business will be in Hopkinton, Mass., under EMC Information Infrastructure CEO David Goulden.

"Our people will do extremely well," said Tucci. "[Dell is] going to use our federation strategy. A number of our companies and a number of our leaders have already been announced. They will run some of the key businesses: VMware, Pivotal and David Goulden and the biggest business will be here. That is a [$30 billion-plus] business here. That will be great for Boston and the communities that we live in."

Tucci, 68, has agreed to continue as chairman and CEO of EMC until the transaction closes.

Asking about the fact that Tucci, a Northeastern University trustee, has never asked for a job in his life, Aoun wondered what was the secret to that track record.

"I am going to retire with a perfect record," said Tucci. "I think the secret is just doing things that are interesting and doing them well. People recognize that, and then they present another interesting thing to you."

PUBLISHED OCT. 29, 2015