Hewlett-Packard CEO Meg Whitman is already trash talking the Dell acquisition of EMC and the ink hasn’t even dried on the $67 billion acquisition.
In a memo to HP employees Whitman writes that Dell won’t have much cash left over to spend on developing and working on new ideas. As she claims, Dell will need to spend $2.5 billion a year in interest payments alone.
“That’s $2.5 billion that they will allocate away from R&D and other business critical activities, which will keep them from better serving their customers,” Whitman wrote in the memo obtained by CNNMoney.
She says the acquisition will be a “massive undertaking and an enormous distraction for employees and their management team.” She pointed to “disruptive” efforts to merge the companies products that will cause “chaos.”
She goes on to tell HP employees to “seize the moment” and allow the acquisition to help HP.
Meg Whitman has reason to lash out, the deal will place Dell in a better position to compete with HP Enterprise for the coveted business customer segment. HP Enterprise will split from HP on November 1 and will be focused on selling hardware like servers and also cloud technology, big money makers for Dell and EMC.
In the meantime, HP has announced up to 85,000 job cuts since Whitman became CEO in 2011.
To finish the acquistion, Dell may need to raise up to $40 billion on Wall Street.
Despite upwards of $50 billion in total debt that will be generated, both companies’ generate a ton of cash which makes them attractive to bond investors. EMC’s balance sheet is currently sitting on $13 billion in cash and short-term assets.