Term Sheet

The latest on private equity, M&A, deals and movements — from Wall Street to Silicon Valley

Michael Dell lays out his plan

April 1, 2013: 4:43 PM ET

dell-computer-logoMichael Dell tells Dell employees what may come next.

FORTUNE -- Last month I was critical of Michael Dell for not explaining his plans for a privately-held Dell Inc. (DELL), were he and Silver Lake to successfully purchase the company. We got a bit more insight from last Friday's proxy statement, but today the CEO sent a memo to all company employees that was more specific.

Here is the part of the memo describing growth plans (verbatim):

• Extend end-to-end information technology solutions capabilities. We anticipate making significant investments in research and development, capital expenditures and personnel additions. This includes hiring additional R&D, services and sales personnel in order to extend the depth and breadth of our capabilities and to increase the number of customers to whom such services and solutions are provided. 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. In addition, it is likely that we will need to make additional acquisitions to complete our transformation.

• Hire additional sales personnel. Our goal is to increase sales coverage and expand the depth of partnerships with channel partners in our Partner Direct program. We also expect to significantly increase investment in training for both new and existing sales personnel, including our channel partners.

• Compete aggressively in emerging countries. We anticipate making significant investments to enhance our presence and ability to compete in emerging markets, including the BRIC countries (i.e., Brazil, Russia, India and China). In addition, we expect to expand aggressively in other parts of Asia, Latin and South America, Central and Eastern Europe, the Middle East and Africa.

• Invest for growth in the PC and tablet business. We have plans to significantly increase investment in our PC and tablet business to enhance our ability to compete. While Dell's strategy in the PC business has been to maximize gross margins, following the transaction, we expect to focus instead on maximizing revenue and cash flow growth with the goal of improving long-term sales and competitive positioning.

•  Accelerate delivery of a simplified and enhanced customer experience. In 2012, we began an effort to simplify every aspect of the customer relationship. If successful, 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. 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. Over time, this should help improve the customer experience, grow customer relationships, drive efficiencies and improve cycle times.

What we still don't know is how The Blackstone Group (BX) views such strategic plans, although I'm sure Michael Dell asked during their recent series of sit-downs. There have been rumors that Blackstone is keen on divestitures -- such selling as Dell Financial Services to General Electric (GE) -- but no such specifics have been disclosed.

If the two sides are in sync, then it's possible that Michael Dell could leave Silver Lake at the altar (or just remain agnostic, awaiting the highest share price). That's assuming, however, that there also is agreement on governance issues (perhaps a thornier subject, given Blackstone's stated desire for a public equity stub).

Anyway, consider this just another brick in the M&A world's most compelling wall.

Sign up for my daily email newsletter on deals and deal-makers: GetTermSheet.com

Join the Conversation
About This Author
Dan Primack
Dan Primack
Senior Editor, Fortune

Dan Primack joined Fortune.com in September 2010 to cover deals and dealmakers, from Wall Street to Sand Hill Road. Previously, Dan was an editor-at-large with Thomson Reuters, where he launched both peHUB.com and the peHUB Wire email service. In a past journalistic life, Dan ran a community paper in Roxbury, Massachusetts. He currently lives just outside of Boston.

Email a Tip | @danprimack | RSS
Current Issue
  • Give the gift of Fortune
  • Get the Fortune app
  • Subscribe
Powered by WordPress.com VIP.