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EMC finishes deal with Dell, ending run as top tech firm

The Hopkinton headquarters of EMC.
The Hopkinton headquarters of EMC.Kayana Szymczak/Getty Images/file 2015

EMC Corp. officially completed its $60 billion sale to Dell Inc. on Wednesday, combining two huge sellers of computing equipment and ending decades of independent ownership for what was Massachusetts’ largest technology company.

The acquisition, considered the largest ever in the tech sector, creates a company called Dell Technologies Inc. It reported a loss of $690 million on sales of nearly $25.3 billion for the first six months of this year when combining Dell’s PC and server business with EMC’s sales of data storage equipment and software.

Dell Technologies is headed by chief executive Michael Dell, who leads a workforce of about 140,000 people. Longtime EMC chief executive Joe Tucci will retire as a result of the deal. EMC shareholders overwhelmingly approved the sale in July.

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The newly combined company’s headquarters remains in Dell’s longtime hometown of Round Rock, Texas, near Austin. Its enterprise computing division will be run from EMC’s hometown of Hopkinton, headed by former EMC executive David Goulden.

In an interview, Goulden sought to soothe jitters that EMC’s sale could siphon money, staff, and influence away from Massachusetts’ tech sector, which long ago saw the industry’s epicenter shift to the San Francisco Bay Area.

Goulden said Dell Technologies plans to keep steady or grow its number of employees in Massachusetts, which stands at about 9,000. While some layoffs could be possible as the two companies combine their operations, overlap between the two was quite small, he said.

“We have one of everything, not two of everything,” Goulden said. “It’s very complementary.”

Goulden also noted that the combined division he leads would become larger than the former EMC because it also contains the servers and other data center products from the Dell portfolio.

“We are planning to consolidate into Massachusetts rather than move out of Massachusetts,” he said.

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Still, employees were probably unsettled by the massive change, said Steve Duplessie, a senior analyst at Enterprise Strategy Group.

“I would say you’re crazy if you’re not concerned,” Duplessie said. “At the senior ranks, things will grow in Hopkinton. But from manufacturing to the mid-level and lower-level positions, if they can be consumed or absorbed in Austin at half the price, they will be. It’s the reality.”

Several of EMC’s subsidiaries become part of the new Dell Technologies, including software sellers RSA Security and Pivotal. In addition, Dell Technologies assumes EMC’s nearly 80 percent ownership of VMware Inc., a publicly traded seller of data center software. VMware has been considered a key asset: Although its sales are smaller than EMC’s, it has been growing faster.

EMC recorded sales of $24.7 billion last year, 1 percent higher than the previous year. Its profits dropped to $2 billion in 2015, from $2.7 billion in 2014.

EMC investors were paid $24.05 cash for each share of stock. They also received shares of a tracking stock meant to reflect the value of EMC’s controlling stake in VMware. Dell raised nearly $50 billion in debt to pay for the deal.

The two companies say they can increase sales of IT products because each has been a leader in different areas of their markets: Dell’s PC and server business was traditionally stronger with small- and medium-sized businesses, while EMC’s storage products are popular with big corporate and government customers.

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But analysts have questioned whether a much larger Dell Technologies can remain nimble enough to compete in a rapidly changing IT sector, where competitors are increasingly offering online “cloud” computing as a replacement for in-house data centers.

Michael Dell said the company’s structure — he partnered with investors to take Dell private in 2013 — was the key, preventing Dell Technologies from being tied to quarterly earnings demands from Wall Street investors.

Dell Technologies’ yearly debt payments will be lower than the $3.5 billion a year on average that EMC has spent on stock buybacks and dividends, the company said.

“We don’t have to cater to the short-term thinking that exists in the market,” Dell said. “We can think in decades.”


Curt Woodward can be reached at curt.woodward@globe.com. Follow him on Twitter @curtwoodward.