The Tweet of the Day yesterday came from Chris Dixon of Andreessen Horowitz, who asked: “Someone please explain why HP is splitting up while Dell and EMC are merging despite the fact they are in exactly the same business?”
Good question.
HP CEO Meg Whitman sent a memo to staff predicting the Dell-EMC merger would result in “chaos.” In a statement released publicly, HP said:
“This is a real opportunity for HP. Two of our largest competitors are attempting a highly distracting, multi-year merger, just as we are launching two new, focused companies. The massive debt burden Dell and EMC are taking on undoubtedly means that they will have to radically reduce R&D, and integration inevitably will create disruption as they rationalize product portfolios, channel programs and leadership.”
That’s strong stuff. But there are clearly two sides to this debate. HP’s split is partly to satisfy public investors who like focused investments – something privately-owned Dell won’t have to worry about. A question for Whitman: would HP have split if it had had a private option? Worth noting that when we asked Fortune 500 CEOs earlier this year whether their company would be easier to manage if it were private, 84% said “yes.”
Meanwhile, Joe Tucci’s exit from EMC will come with a big paycheck. Equilar calculates that the company’s change of control provisions mean Tucci could walk away with $27.2 million.
Enjoy the day. I’ll be spending it with Fortune’s Most Powerful Women in Washington, where I’ll ask another big tech competitor, IBM CEO Ginni Rometty, what she makes of the Dell deal.
| Alan Murray | |
| @alansmurray | |
| alan.murray@fortune.com |
Top News
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The world's two largest brewing companies look poised to merge as SABMiller decided to recommend a slightly improved, informal offer from larger rival Anheuser-Busch InBev in a deal that values SABMiller's equity at $104 billion. The merger would create a company that accounts for one in every three beers drunk on the planet, though divestitures in key markets like the U.S. will almost certainly be needed. Fortune
• InBev's beer distribution probed
A separate report is indicating the U.S. Justice Department is looking into allegations Anheuser-Busch is buying distributors to curb competition from fast-growing craft brewers by preventing them from getting their product on store shelves. Reuters says antitrust regulators are looking into craft brewers' claims. AB InBev pushes some independent distributors to only carry InBev's beers and end their ties with the smaller craft companies. Reuters
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Eli Lilly's shares slipped badly on Monday after the drug maker said it would discontinue trials for a heart treatment – the only cardiovascular-focused treatment in the company's late-stage portfolio. As Fortune reports, the treatment was projected to bring $632.7 million in sales by 2020. Lilly also booked a charge on the halted trials. Similar methods pursued by Roche and Pfizer were also abandoned, while Merck & Co. remains a hold out. Fortune
• Meet the frontrunner at Barclays
Bloomberg is reporting that U.K.-based bank Barclays is close to naming Jes Staley, a 34-year veteran of J.P. Morgan Chase, as its next chief executive officer. The bank has reportedly told regulators he is the frontrunner for the job and if approved, the appointment could be announced within two weeks, sources told the news agency. Barclays, which has been in the process of a slow restructuring, is hoping to find a CEO that can boost revenue while also steering clear of any problems that could hurt profits. Bloomberg
Around the Water Cooler
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That quote can be attributed to Mary Callahan Erdoes, CEO of J.P. Morgan Asset Management and a speaker at Fortune's Most Powerful Women summit. On Monday afternoon, Erdoes took issue with a recent op-ed from former U.S. Treasury Secretary Larry Summers, who declared the global economy in "serious danger." Erdoes struck a far more bullish tone, pointing out consumers are spending and they aren't as levered as in the past. Fortune
• Exec leaves Starbucks for Chipotle
Chipotle has created a new executive position – chief information officer – and hired away Starbucks' CIO to take on the job. Curt Garner will join the fast-casual Mexican restaurant chain next month, a move that comes as technology becomes an increasingly important component of how restaurant chains can compete for business. The progress that Starbucks has made – including mobile payments, mobile ordering and delivery – likely caught Chipotle’s attention. Fortune
• J.P. Morgan gets stingy on phones
The nation's biggest bank by assets is looking to save tens of millions of dollars by eliminating support for BlackBerry wireless devices next year and also mandating that some employees pay for their own phones – regardless of the manufacturer that's used. The move is part of a broader effort to trim costs as a lack of rising interest rates, along with sluggish trading revenue, has hurt profit growth for banks. Another cost-cutting target is hotels approved for business trips: employees need manager approval to stay at five-star hotels. WSJ (subscription required)
• Walmart returns to its roots
While at Fortune's Most Powerful Women summit, Walmart U.S. operations chief Judith McKenna said the world's largest retailer is trying to get back to the core promise of what the company was built on. "You will get cynicism, and the only way to break through is keep showing people and take actions," she said. One small improvement? The retailer stopped playing the same CD over and over in stores. It was driving employees crazy. Fortune
