By Heather Clancy
October 8, 2015

It’s a safe bet that talk by the water cooler this morning will center on speculation over the potential merger between Dell and EMC, which has been dealing with strategy distractions for months and months.

You’ve got to feel some sympathy for EMC’s sales team, which probably spends half of every meeting defending the company’s “federation” of related business, including virtualization giant VMware, security company RSA, and cloud software development concern Pivotal. That uncertainty must be a persistent drag on revenue.

You can credit the Wall Street Journal with breaking the news about the potential union, which would rate as one of the biggest high-tech mergers ever. In retrospect, hints that Dell was studying EMC’s federation”model were evident for some time. Dell director Egon Durban mentioned it was considering a similar strategy during an interview at the Fortune Brainstorm conference in June. Durban is managing partner of Silver Lake, which took the technology giant private in a $25 billion deal.

EMC has been exploring strategic alternatives to appease activist investor Elliott Management, which owns a 2% stake. Elliott’s biggest request: spin out VMware. It looks like it might finally get its way. According to the Journal, that’s one thing being discussed seriously as part of the “advanced” Dell-EMC negotiations.

The devil is in the details, of course. It’s difficult to imagine who is really calling the shots, given that EMC’s market capitalization is $50 billion. That’s twice Dell’s value when it left the public market in late 2013.

Other news to consider while we’re waiting for the cliffhanger to play out: Average annual compensation for chief information officers now tops $1.1 million, but more are being held to the same financial metrics as their CEOs. That means they have to pay far more attention to revenue-generating technology investments. Plus, Amazon Web Services promises to make it far simpler for big businesses to switch to its cloud data centers. See today’s Download for more details.


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