Hewlett-Packard Co. CEO Meg Whitman sent an email to employees of HPE (HP Enterprise) outlining the challenged Dell, Inc. will face in swallowing EMC.

HP knows a thing or two about trying to turn around a big company. Its new strategy is to be smaller, not larger, and on November 1st HPE will formally split from the Hewlett-Packard Company.

My favorite quote:  “Dell will need to pay roughly $2.5 billion a year in interest alone.”

The $2 billion per year in interest payments seems like a rounding error in this transaction, so it will be interesting to see whose strategy works best.  Meanwhile IBM and Oracle have cleaned up their ships and are ready for battle.

HP can gain in this transaction if it comes out on November 1 with guns blasting.  At the HP Discover conference in Las Vegas in June, Whitman and team rallied around hybrid cloud.  “We all live in a hybrid world,” she said.

Whitman’s memo to HP Enterprise employees

To: All Hewlett Packard Enterprise Employees

You probably saw the news earlier today as Dell announced that they would acquire EMC for $67 billion. I wanted to take a quick moment to tell you why I (and you should too) believe this is a good thing for Hewlett Packard Enterprise and an opportunity for us to seize the moment. This is validation for the strategy that we have laid out and I am not surprised that others would try to emulate it. But, the reality is that we are two years ahead of the game and it will be difficult for others to catch up.

First, let me give a little context. To pay back the interest on the $50 billion of debt that the new combined company will have on their balance sheet, Dell will need to pay roughly $2.5 billion a year in interest 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.

Second, integrating EMC and Dell, which combined have more than $75 billion in revenue and nearly 200,000 employees, is no small feat. This will be a massive undertaking and an enormous distraction for employees and their management team as two very different cultures come together, leadership teams shift and an entirely new strategy is developed.

Third, bringing two portfolios together will require a significant amount of product rationalization, which will be disruptive to their business and create confusion for their customers. Customers simply will not know if the products they are buying today from either company will be supported in 18 months.

Fourth, this move is going to cause chaos in the channel as they bring together two different programs and approaches.

All of this at the very moment when we have completed our journey to create two new, focused companies. We’re organized, we have a strong balance sheet and our innovation engine is humming. So, get out in front of your customers and your partners. Tell them our story. Take advantage of this moment.

Best,

Meg

Note: SiliconANGLE’s @theCUBE will be broadcasting live in London on December 1st-4th and will get the scoop on the situation at HP.    www.siliconangle.tv