“A lot of people have a lot of opinions — a lot of them are not based on a lot of fact,” Tucci said on EMC’s fourth-quarter earnings call with analysts this morning.
The deal involves a $24-per-share cash offer for EMC stock and the creation of a VMware tracking stock that would go to Dell shareholders. One concerning sign for some investors is that EMC shares are trading near $24 and have closed at less than $24 as recently as this week. It’s been argued that this gives the VMware tracking stock a value near zero.
Dell would also have to take on some debt in order to pay for EMC. But all the pieces are in place, according to EMC.
“The banks have told us they can raise the money,” Tucci said.
The deal is still set to close sometime between May and October. Neither EMC nor Dell has tightened that timeframe.
“That’ll probably be dependent on a couple of the foreign antitrust approvals,” said Tucci.
He argued that the real factor to watch is EMC’s performance compared with its peers. Naturally, he described it as exemplary.
“As reported — forget about currency — we’ve had 25 quarters now in a row, the last one being flat, and the previous 24 growing year-on-year,” Tucci said, referring to EMC’s sales. “Focus on our cash flow; our cash flow is really good.”
EMC generated $5.4 billion in cash in 2015. That’s actually down from the $6.5 billion generated in 2014, although currency fluctuations could account for some of the difference.
Separately, Tucci said he understands the consternation the deal has created among EMC customers and employees. And it’s true that EMC and VMware are both doing a bit of belt-tightening prior to the merger. EMC is undergoing cuts of unspecified size, due to be completed this quarter, while VMware announced yesterday a layoff of 800.
Overall, Tucci believes EMC has managed to put customers and employees more at ease with the Dell acquisition.
“A deal like this causes angst, and you do have to take an extra lap around the track to go explain. Once you get them understanding what we could create here, we get a positive effect.”
For its fourth quarter, which ended Dec. 31, EMC reported revenues of $7 billion and net income of $771 million, or 39 cents per share. For the same quarter a year ago, EMC reported revenues of 7 billion and net income of $1.1 billion, or 56 cents per share.
Non-GAAP earnings per share of 65 cents matched analysts’ expectations, according to Thomson Financial.