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By | Timothy Prickett Morgan 8th January 2013 18:31

Dell chief biz gobbler Johnson flees for hedge-fund Blackstone

IT giant commits to continued embiggening

'Tis the season for executive management changes. David Johnson, the mergers and acquisition chief that Michael Dell lured away from IBM, is leaving Round Rock to return to the Empire State.

Johnson was responsible for architecting Dell's expansion into services, storage, and software after leaving Big Blue.

A Dell spokesperson confirmed to El Reg that Johnson has left the Texan IT giant and is taking an executive position at Blackstone Group, a private equity and hedge fund giant. His new employer was founded in 1985 and has at least $150bn of assets under management and had revenues of more than $3.65bn in 2011.

Johnson was hotly pursued by Dell, which needed an M&A guy to help it get over its reliance on increasingly low-profit PC and commodity servers and into higher-margin software and services. Johnson was the top M&A executive at IBM and spent the prior 27 years at Big Blue.

He got a bachelor's degree in English from Boston College in 1975 and joined IBM in 1981, rising through the ranks to eventually become vice-president of corporate development, helping former CEO Sam Palmisano sort out its own acquisitions.

Significantly, Johnson was at IBM until May 2009, which means he did the due diligence on a possible acquisition when former Sun Microsystems CEO Jonathan Schwartz approached the top brass at IBM over a possible buy-up in November 2008. IBM and Sun haggled over the price, and in April 2009 Oracle which wanted to get its hands on Java and Solaris, bought the whole company for $7.4bn ($5.6bn net of cash), thus creating a brand new – and some would say much more dangerous – system vendor that Big Blue, Hewlett-Packard, Dell, and others now have to contend with.

IBM might not have wanted Sun's hardware and systems software businesses, but it was perhaps foolish to let it fall into enemy hands.

IBM sued both Dell and Johnson in May 2009, claiming that Johnson's move to the senior vice-president of corporate strategy position at IBM's upstart systems rival from Texas was in violation of a non-compete clause in an employment contract and because he was privy to trade secrets.

A month later a federal judge sided with Johnson and said the non-compete clause was not in effect since Johnson purposefully signed in the wrong place on his contract in 2001 because he did not want to comply with the non-compete.

Johnson and Dell prevailed, and he moved down to Texas. The new M&A chief did not orchestrate Dell's $3.9bn acquisition of Perot Systems in September 2009, although he was at Dell when it happened, since Dell was already working on that deal when he came on board. Johnson was behind Dell's unsuccessful bid for storage array maker 3PAR, which it tried to acquire in August 2010 for $1.15bn and which equally storage-crazed HP prevailed in buying after a lot of pushing and shoving a month later for $2.4bn.

But that's OK: Johnson got his revenge by not buying big data-muncher Autonomy, which HP choked down for a stunning – and most say ridiculous – $10.7bn in August 2011.

In his tenure at Dell, Johnson presided over 20 acquisition deals worth a combined $10bn, according to Dell, which added that his efforts "established the company as 'best in class' at integrating acquired technology firms" and that he had "built a sustainable set of tools and processes to grow new capabilities within Dell" and had left behind "a strong and sustainable organization behind that will continue to execute our strategy and pursue our aggressive M&A activities."

Johnson actually left Dell at the end of 2012 for his job at Blackstone Group, which is unknown as El Reg goes to press but which is rumored to be on the private equity side.

Two Dell executives will split Johnson's former duties at the IT equipment maker and increasingly services and software player. Chris Kleiman will assume the position of vice-president of Dell's corporate development organization and will report to CFO Brian Gladden, and Prakash Jothee, will be vice-president of the corporate strategy team and will also report to Gladden. ®

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