WHEN: Today, Monday, July 2, 2018
WHERE: CNBC’s “Squawk on the Street”
The following is the unofficial transcript of a CNBC EXCLUSIVE interview with Dell Technologies Chairman & CEO Michael Dell and CNBC’s David Faber today, Monday, July 2nd. The following is a link to video of the full interview on CNBC.com: .
All references must be sourced to CNBC.
DAVID FABER: FIVE YEARS AFTER TAKING THE COMPANY PRIVATE, DELL WILL BECOME PUBLIC AGAIN, BUYING OUT THE TRACKING STOCK OF VMWARE, IT’S CLOUD SOFTWARE UNIT THAT IT OWNS LESS THAN 81% OF. VMWARE AND THE NEWLY CREATED DELL TECHNOLOGIES CLASS C SHARES ARE BOTH UP SHARPLY THIS MORNING. JOINING US NOW FOR A CNBC EXCLUSIVE INTERVIEW IS DELL TECHNOLOGIES CHAIRMAN AND CEO MICHAEL DELL, NICE TO HAVE YOU HIRE. THANKS FOR COMING DOWN.
MICHAEL DELL: GREAT TO BE WITH YOU, I MISSED YOU GUYS.
FABER: WE MISSED YOU, TOO. AND NOW THAT YOU’RE GOING TO RETURN RIGHT HERE I GUESS TO THE NYSE AS A PUBLICLY TRADED EQUITY THAT WILL BE NICE AS WELL. YOU KNOW, YOU HAVE MADE NO SECRET, THOUGH, THE FACT THAT YOU PREFER TO BE PRIVATE. WHAT WAS THE COST-BENEFIT ANALYSIS THAT IT WAS WORTH DOING THIS TRANSACTION TO BECOMING A PUBLIC COMPANY AGAIN?
DELL: WELL, IN THE LAST FIVE YEARS A LOT HAS CHANGED. YOU KNOW, WE HAVE COMPLETELY TRANSFORMED THE BUSINESS, BECOME THE ESSENTIAL INFRASTRUCTURE COMPANY, REALLY CHANGED THE PROFILE NATURE OF THE COMPANY IN TERMS OF OUR CAPABILITIES, A BROAD SET OF CAPABILITIES ACROSS THE DATA CENTER, SOFTWARE DEFINED, EVERYTHING, 85% OF OUR ENGINEERS ARE IN SOFTWARE. YOU LOOK AT OUR BUSINESS, LAST QUARTER IT GREW 17% IN GROWTH. YOU KNOW, EARNINGS WERE UP, STRONG DOUBLE DIGITS. AND THIS IS ABOUT SIMPLIFYING OUR CAPITAL STRUCTURE AND EXPOSING THE VALUE THAT WE’VE CREATED TO SHAREHOLDERS.
FABER: BUT WHY WAS THAT WORTH DOING, AGAIN? I UNDERSTAND SIMPLIFYING THE CAPITAL STRUCTURE IS CERTAINLY SOMETHING YOU MIGHT WANT TO DO, BUT WHY IS IT WORTH BECOMING A PUBLIC COMPANY TO DO IT?
DELL: WELL, LOOK, I THINK WE WENT THROUGH A FAIRLY EXHAUSTIVE PROCESS THAT WAS DISCLOSED IN THE 13D FILING AND YOU GUYS REPORTED ON YOU KNOW, A FAIR BIT, AND LOOKED AT ALL THE VARIOUS OPTIONS AND CAME TO THE CONCLUSION, YOU KNOW, ALONG WITH TWO SPECIAL COMMITTEES, TWO INDEPENDENT SPECIAL COMMITTEES.
FABER: RIGHT, VMWARE AND -- RIGHT.
DELL: EXACTLY. THAT THIS WAS THE BEST OPTION.
FABER: THE BEST OPTION TO DO WHAT, THOUGH? TO SIMPLIFY THE CAPITAL STRUCTURE? THAT WAS THE END GOAL HERE?
DELL: TO SIMPLIFY THE CAPITAL STRUCTURE.
FABER: AND WHY WAS THAT A DESIRED END, I GUESS.
DELL: WELL, IT’S BEEN TOO COMPLICATED. AND AT THE SAME TIME, LOOK, WE HAVE AN EXTRAORDINARY BUSINESS THAT’S DOING INCREDIBLY WELL. WE BROUGHT TOGETHER THE BEST ASSETS OF THE INDUSTRY. WE HAVE INVESTED HEAVILY. WE CHANGED THE TRAJECTORY CONSIDERABLY, AND IF YOU LOOK AT THE ORIGINAL BUSINESSES THAT WE STARTED WITH, ALRIGHT, WE’VE HAD 21 QUARTERS IN A ROW OF GROWTH AND SHARE IN THOSE BUSINESSES. WE’VE BEEN GAINING SHARES DRAMATICALLY IN SERVERS. WE’RE NUMBER ONE IN REVENUE AND PROFIT, IN THE CLIENT BUSINESS. NUMBER ONE IN REVENUE AND GROWTH AND SERVERS. NUMBER ONE IN STORAGE, VIRTUALIZATION. I MEAN, THERE’S A BROAD SWATHE OF CATEGORIES. AND THEN YOU STEP BACK AND YOU SAY, “WHAT’S GOING ON IN THE INDUSTRY?” AND MORE BROADLY, THERE IS A TECHNOLOGY-LED BOOM IN INVESTMENT THAT REQUIRES MODERN IT INFRASTRUCTURE. AND DELL TECHNOLOGIES IS THE LEADING INFRASTRUCTURE COMPANY IN -- ON THE PLANET. AND BECAUSE WE BROUGHT TOGETHER DELL AND EMC AND VMWARE AND PIVOTABLE, WE’VE CAPTURED THE HEARTS AND MINDS OF THE DECISION MAKERS, YOU KNOW, IN THIS AGE OF 5G AND IOT AND AI, AND WE’RE WINNING, AND SO, IT’S A GREAT TIME TO, YOU KNOW, DO THIS.
FABER: IT’S A GREAT TIME TO DO IT BECAUSE OF THE STATE OF THE INDUSTRY. BECAUSE YOU’RE IN A GOOD POSITION TO DO IT. BUT -- I MEAN YOU’RE NOT GIVING UP CONTROL ANYHOW, BUT YOU COULD CONCEIVABLY HAVE DONE ALL THOSE THINGS AS A PRIVATE COMPANY AND CONTINUED TO DO THEM AS YOU HAVE, RIGHT?
DELL: YOU ARE CORRECT.
FABER: IS IT BECAUSE SILVER LAKE WANTS TO SELL WHAT WILL BE A 16% TO 18% STAKE IN THE OVERALL COMPANY? IS THAT WHY GOING PUBLIC IS A BETTER THING?
DELL: NO. YOU KNOW, THEY’VE BEEN VERY CLEAR ABOUT THEIR INTENTION TO CONTINUE TO HOLD, YOU KNOW, AND YOU KNOW, THEY’RE VERY COMMITTED TO THE INVESTMENT. AND I’LL TELL YOU, I’VE ASKED THEM SEVERAL TIMES, “HEY, YOU GUYS WANT TO SELL?” I’LL BUY THEM OUT, RIGHT?
FABER: THEY’VE BEEN AT IT A LONG TIME. AND A PARTNER OF YOURS FOR QUITE SOME TIME. AND IT’S A GREAT INVESTMENT GAIN FOR THEM AS WELL, WHICH, YOU KNOW, PE FIRMS DO LIKE –
DELL: EVERYTHING’S WORKING OUT PRETTY WELL. SO, LOOK, WE HAVE A FANTASTIC BUSINESS HERE, IT’S DOING EXTRAORDINARILY WELL. YOU KNOW, WE –
FABER: YOU WOULD BUY OUT SILVER LAKE IF THEY ACTUALLY WANTED TO SELL?
DELL: THAT’S NOT THE TRANSACTION THAT WE’RE HERE TO TALK ABOUT, RIGHT?
FABER: NO – YOU JUST MENTIONED IT. THE TRANSACTION WE ARE TALKING ABOUT IS TAKING OUT THE TRACKING STOCK, WHICH HAS BEEN TRADING AT A SIGNIFICANT DISCOUNT TO THE UNDERLYING VALUE. BUT THERE WERE A NUMBER OF OTHER THINGS YOU COULD HAVE CONSIDERED. A REVERSE MERGER WOULD HAVE BEEN ONE. OR JUST AN IPO OF DELL ITSELF SEPERATELY. WHY WAS THIS THE PREFERRED METHOD?
DELL: YOU KNOW, WE WENT THROUGH ALL THE VARIOUS OPTIONS, CERTAINLY THE IPO WAS AN OPTION, THERE WERE OTHER OPTIONS THAT WERE DISCUSSED AND WE CONCLUDED THAT THIS WAS, YOU KNOW, THE BEST OF ALL THE OPTIONS. AND –
FABER: WHY, THOUGH?
DELL: IT WAS A RELATIVELY STRAIGHT FORWARD PATH. AND IT’S SORT OF A ONE-STEP SIMPLIFICATION, INSTEAD OF A TWO-STEP SIMPLIFICATION. YOU KNOW, THE OPTION TO GO PUBLIC WAS VERY MUCH THERE, RIGHT. BUT THEN WE -- YOU WOULD THEN LATER, PROBABLY CONVERT THE TRACKING STOCK INTO THE PUBLIC COMMON AND SO YOU CREATE A LITTLE MORE COMPLEXITY BEFORE YOU HAVE LESS COMPLEXITY, AND SO IF YOU COULD DO IT IN ONE STEP, THAT CERTAINLY IS EASIER.
FABER: ANOTHER QUESTION IS ABOUT VMWARE, OF COURSE YOU CONTROL IT AT 81% OR SO. BUT – AND I KNOW YOU’VE GOT --
DELL: I LOVE VMWARE.
FABER: DO YOU WANT IT TO REMAIN A PUBLIC COMPANY ON ITS OWN? IS THAT THE PLAN HERE?
DELL: ABSOLUTELY. WE WANT IT TO REMAIN AN INDEPENDENT PUBLIC COMPANY. VMWARE IS DOING GREAT. PAT AND THE TEAM HAVE DONE A FABULOUS JOB IN MOVING THE BUSINESS FOR THIS MULTI-CLOUD ERA, AND ALONG WITH THE KIND OF TURBO BOOST WITH DELL TECHNOLOGIES, WITH 40,000 SALESPEOPLE, YOU KNOW, VMWARE IS EXTREMELY WELL POSITIONED.
FABER: SO THERE’S NO PLAN DOWN THE ROAD CONCEIVABLY TO CONSOLIDATE THAT AS WELL?
DELL: WE HAVE NO PLANS TO DO THAT.
MICHAEL SANTOLI: YOU MADE THE CASE A FEW YEARS AGO WHEN YOU WENT PRIVATE, THAT, YOU KNOW, THE PUBLIC MARKETS SOMETIMES DON’T HAVE THE PATIENCE TO WAIT OUT THE KINDS OF TRANSFORMATION THAT YOU NOW SAY THE COMPANY HAS DONE. AND SO – AND WE’VE SEEN OTHER LARGE COMPANIES KIND OF STRUGGLE TO FOCUS INVESTORS ON THE FASTER GROWING PIECES OF THE COMPANY, IBM OR CISCO, WHICHEVER THEY ARE. YOU’RE NOW SAYING YOU’RE WINNING, YOU’RE WINNING AGAINST WHOM? I MEAN WHO IS YOUR COMPETITION? WHO SHOULD INVESTORS VIEW DELL TECHNOLOGIES ALONGSIDE?
DELL: SO FIRST I WOULD SAY THAT YOU KNOW, THERE’S ABOUT A $3 TRILLION IT INDUSTRY AND WE’RE BUT A SMALL, YOU KNOW, $87 BILLION COMPANY, IN THE $3 TRILLION, SO IT’S AN ENORMOUS OVERALL MARKET SPACE. WE COMPETE WITH A VARIETY OF COMPANIES. WHEN WE LOOK AT OUR BUSINESS, YOU KNOW, WE MEASURE RELATIVE SHARE. HOW ARE WE DOING? ARE WE GAINING SHARE? ARE WE LOSING SHARE? YOU KNOW, WE’RE NUMBER ONE IN AS I SAID LIKE 23 DIFFERENT MAJOR CATEGORIES OF IT INFRASTCUTURE, AND WE’RE GAING SHARE IN PRETTY MUCH ALL OF THEM. SO WHO ARE WE COMPETING AGAINST? IT’S THE NUMBER TWO, NUMBER THREE, NUMBER FOUR. IN MANY CASES, YOU KNOW, FOR EXAMPLE, IN STORAGE, WE’RE BIGGER THAN NUMBER TWO AND NUMBER THREE AND NUMBER FOUR ALL COMBINED TOGETHER. AND WE’RE GROWING. SO – AND BY THE WAY, WE LOOK AT SHARE OF THE PROFITS AS OR EVEN MORE IMPORTANT THAN THE SHARE OF REVENUE OR UNITS. BUT I THINK WHAT’S HAPPENING MORE BROADLY WITH THIS TECHNOLOGY-LED BOOM IN INVESTMENT IS THAT THE ROLE OF TECHNOLOGY IS FUNDAMENTALLY CHANGING. SO YOU THINK ANY BUSINESS OUT THERE, SMALL, LARGE, PUBLIC, PRIVATE, ANY TYPE OF BUSINESS, IS USING TECHNOLOGY TODAY IN FUNDAMENTALLY DIFFERENT WAYS THAN IT WAS FIVE OR TEN YEARS AGO. AND SO THE IMPORTANCE OF DATA AND THE AMOUNT OF DATA, WITH ALL THESE BILLIONS OF CONNECTED DEVICES, THAT ARE BEING CREATED, THAT IS CREATING KIND OF THIS TSUNAMI OF DATA AND INFORMATION, AND IT HAS TO BE USED IN REAL TIME, TURNED INTO INSIGHTS ON THE EDGE, IN A DISTRIBUTED CORE AND IN CLOUDS, ON PREMISE, PUBLIC CLOUDS AND NO COMPANY IS BETTER POSITIONED TO WIN IN THAT THAN DELL TECHNOLOGIES. AND THAT’S WHY WE’RE WINNING AGAINST OUR COMPETITION. AND I BELIEVE WE HAVE A FABULOUS FUTURE AHEAD OF US.
FABER: YOU – THE CHANGES YOU HAVE MADE IN THE COMPANIES IN THE FIVE-PLUS YEARS IT HAS BEEN A PRIVATE COMPANY, SHOULD WE BELIEVE SOMEHOW THAT YOU ARE ABLE TO DO THINGS THAT YOU’RE NO LONGER ABLE TO DO AS A PUBLIC COMPANY?
DELL: I DO NOT BELIEVE THAT WE WON’T BE ABLE TO DO THAT, RIGHT? I BELIEVE THAT GIVEN THE STRUCTURE THAT WE HAVE AND THE MOMENTUM THAT WE HAVE AND THE SET OF ASSETS THAT WE HAVE, THAT WE CONTINUE TO INVEST FOR THE LONG-TERM. AND THAT IS ABSOLUTELY WHAT WE INTEND TO DO. WE SAID IT ON OUR CONFERENCE CALL THIS MORNING.
FABER: YES.
DELL: AND IT WILL BE CLEARLY REPEATED. SO LOOK, ANY SHAREHOLDER THAT SAYS WE WANT TO DO THIS TO OPTIMIZE FOR THE SHORT-TERM, NOT TO BE THERE FOR THE LONG-TERM, YOU CAME TO THE WRONG COMPANY. RIGHT? I AM THE ULTIMATE LONG-TERM INVESTOR IN MY OWN COMPANY.
FABER: AND YOU WERE PREVIOUSLY, BUT YOU HAVE MORE CONTROL THAN YOU HAD WHEN YOU WERE LAST A PUBLIC COMPANY.
DELL: AND IT’S INTERESTING. YOU KNOW, IT WAS ALMOST EXACTLY 30 YEARS AGO THAT WE WENT PUBLIC. AND YOU KNOW, DURING THE TIME WE WERE PUBLIC, THE STOCK WENT UP 13,500%. THAT WAS 27 TIMES BETTER THAN THE S&P 500. DON’T KNOW IF WE’LL DO IT AGAIN, BUT WE’LL GIVE IT A SHOT.
SARA EISEN: MICHAEL, I WANTED TO TAKE YOUR TEMPERATURE ON THE OVERALL BUSINESS ENVIRONMENT. BECAUSE THE LAST TIME WE TALKED, IT WAS JANUARY 2017 IN DAVOS, IT WAS INAUGURATION WEEK OF PRESIDENT DONALD TRUMP AND HERE’S WHAT YOU TOLD ME THEN.
DELL: OPTIMISM AMONG MY PEERS IN THE UNITED STATES AND I THINK THAT’S FOUNDED ON WHAT WE SEE IN TERMS OF THE HIGH QUALITY TEAM THAT’S BEEN SELECTED, A NUMBER OF THE ADVISORY COMMITTEES THAT HAVE BEEN PUT TOGETHER AS WE HAVE BEEN, YOU KNOW, INVOLVED IN THOSE DISCUSSIONS, AND THE BASIC AGENDA AS A PRO GROWTH AGENDA, WE THINK IS QUITE POSITIVE.
EISEN: YOU WERE PRETTY OPTIMISTIC. SO THERE ARE NO CEO ADVISORY COUNCILS, AND A LOT OF THAT HIGH QUALITY TEAM HAS LEFT THE WHITE HOUSE. ARE YOU STILL FEELING OPTIMISTIC?
DELL: NOT WITHSTANDING THOSE EXTREMELY ACCURATE POINTS, I’M MORE OPTOMISTIC THAN I WAS THEN ABOUT THE BUSINESS ENVIRONMENT. AND WHAT WE’RE GOING ON BROADLY. SO WHAT I LOOKING AT IS THE TOP 50 COUNTRIES IN THE WORLD. AND WHAT IS OUR GROWTH RATE? WELL, FIRST YOU HAVE SOMETHING EXTRAORDINARY GOING ON RIGHT NOW WHERE ALMOST EVERY ONE OF THE TOP 50 ECONOMIES IN THE WORLD IS GROWING. THEN I LOOK AT OUR BUSINESS, THEY’RE PRETTY MUCH ALL GROWING DOUBLE DIGITS, RIGHT? AND IT’S NOT JUST LARGE OR SMALL OR MEDIUM CUSTOMERS AND NOT JUST THIS PRODUCT OR THAT PRODUCT, IT’S EVERY PRODUCT, EVERY CUSTOMER, EVERY REGION, ALMOST WITHOUT EXCEPTION GROWING AT DOUBLE DIGITS. SO THERE IS DEFINITELY, AGAIN, A TECHNOLOGY LED BOOM IN INVESTMENT THAT REQUIRES MODERN IN INFRASTRUCTURE AND TURNS OUT, YOU KNOW, WE’RE THE WORLD’S LEADER IN THAT.
EISEN: SO YOU’RE NOT WORRIED ABOUT LIMITS BEING PUT ON THAT FROM THE UNITED STATES AND NOW OTHERS IN THE FORM OF TARIFFS AND TRADE PROTECTIONISM? I MEAN JUST LAST WEEK, WE WERE TALKING ABOUT WAYS TO CURB CHINESE INVESTMENT IN U.S. TECHNOLOGY.
DELL: WELL, SURE, THOSE ARE CONCERNS THAT WE ALL HAVE TO THINK ABOUT AND ADDRESS, THEY’RE NOT UNIQUE TO OUR COMPANY. YOU KNOW, WE’RE CERTAINLY PAYING CLOSE ATTENTION AND WEIGHING IN TERMS OF GLOBAL TRADE, AND –
EISEN: ARE YOU STILL WEIGHING IN WITH THE ADMINISTRATION EVEN THOUGH YOU’RE NOT OFFICIALLY ON THE CEO COUNCIL ANYMORE?
DELL: WE’RE DEFINITELY WEIGHING IN WITH OUR POINT OF VIEW ON ALL OF THE MATTERS AS IT RELATES TO TRADE.
FABER: GLOBAL SUPPLY -- YOU ARE AS GLOBAL A COMPANY AS IT COMES WITH A GLOBAL SUPPLY CHAIN, MANUFACTURING IN PLACES AROUND THE WORLD. HOW CONCERNED ARE YOU ABOUT THIS BACK AND FORTH, PARTICULARLY AS IT RELATES TO CHINA, WHICH IS AN IMPORTANT MARKET?
FABER: AND WE DO HAVE A SIGNIFICANT BUSINESS IN CHINA. CHINA IS OUR SECOND LARGEST MARKET OUTSIDE THE UNITED STATES TO SELL OUR PRODUCTS.
FABER: RIGHT.
FABER: YOU KNOW, I STILL TAKE THE BELIEF THAT, YOU KNOW, THE TRADE, AS IT RELATES TO THE U.S. AND CHINA SPECIFICALLY, THE COUNTRIES ARE COMPLETELY INTERTWINED. IT’S MUTUAL ASSURED DESTRUCTION IF THERE’S A MASSIVE BREAKDOWN IN TRADE, AND IT WILL BE AN EXTREMELY BAD OUTCOME FOR BOTH COUNTRIES. NO ONE WILL WIN. SO THEREFORE I THINK THAT THE LIKELIHOOD OF THAT HAPPENING IS EXTREMELY LOW. NOW, WILL THERE BE MODIFICATIONS TO TRADE FLOWS AND TRADE AGREEMENTS AND THAT SORT OF THING? PROBABLY SO. BUT I THINK WE’RE AS WELL POSITIONED OR AS CORRECTLY POSITIONED AS ANY COMPANY COULD BE FOR THAT.
FABER: SO LIKE A LOT OF THE CEOs THAT WE HAVE SPOKEN TO, YOU EVENTUALLY THINK THAT RATIONALITY PREVAIL, I GUESS TO PUT IT ONE WAY.
DELL: I DO.
FABER: MICHAEL YOU MENTIONED 30 YEARS SINCE THE FIRST COMPANY FIRST WENT PUBLIC, YOU’VE BEEN A CEO FOR A LONG TIME. YOU’RE STILL A YOUNG MAN, DON’T GET ME WRONG, I THINK WE’RE RELATIVE PEERS THERE. DO YOU WANT TO KEEP DOING THIS FOR YEARS TO COME? DO YOU EVER THINK OF SORT OF ANOTHER CHAPTER OR ARE YOU FOCUSED SQUARELY ON REMAINING IN THIS JOB FOR THE LONG TERM FROM HERE?
DELL: I LOVE WHAT I’M DOING, IF SOMEBODY TOLD ME I COULDN’T DO THIS, I’D GO INTO SOME KIND OF A DEPRESSION. SO I ABSOLUTELY LOVE WHAT I’M DOING.
FABER: AND WILL KEEP DOING IT, I ASSUME.
DELL: AND AM ABSOLUTELY PLANNING TO KEEP DOING IT FOR MANY MANY YEARS TO COME.
FABER: WELL, LISTEN. WE APPRECIATE YOUR COMING BY AND WE LOOK FORWARD TO TALKING TO YOU IN THE FUTURE AS WELL AS A PUBLIC COMPANY. ONCE AGAIN, THANK YOU.
DELL: THANK YOU.
For more information contact:
Jennifer Dauble
CNBC
t: 201.735.4721
m: 201.615.2787
e: jennifer.dauble@nbcuni.com
Emma Martin
CNBC
t: 201.735.4713
m: 551.275.6221
e: emma.martin@nbcuni.com