EMC is warning investors that leaning on the channel once it is acquired by Dell could seriously damage its health or at least wealth.
EMC does about 60 percent of its business through the channel, and is worried that an increased reliance on channel partners “may negatively impact” gross margins. It told the US Securities and Exchange Commission:
“As we focus on new market opportunities and additional customers through our various distribution channels, including small-to-medium sized businesses, we may be required to provide different levels of service and support than we typically have provided in the past. We may have difficulty managing directly or indirectly through our channels these different service and support requirements and may be required to incur substantial costs to provide such services, which may adversely affect our business, results of operations or financial condition.”
EMC has traditionally focused on high-end enterprise customers while Dell, its soon-to-be parent company, used its renowned supply chain to become a leader in the consumer, small business and mid-market arenas.
For EMC’s second quarter ended June 30, perhaps its last as a stand-alone, publicly traded company, EMC’s revenue was essentially flat year-over-year at $6.03 billion while its profit jumped more than 21 percent to $630 million or 29 centers per share.
The Dell-EMC merger, which will result in the creation of Dell Technologies, is expected to close before the end of October.
