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Dell Going Private In $24.4 Billion Agreement

timothy posted about a year ago | from the next-month-back-in-the-old-dorm-room dept.

Businesses 217

Nerval's Lobster writes "Dell is going private again, as the result of a $24.4 billion deal involving private-equity investors and Microsoft. The deal will close before the end of the second quarter of Dell's fiscal 2014, according to Reuters. Dell founder and namesake Michael Dell, who owns roughly 14 percent of the company's common shares, will continue to lead the newly privatized venture as Chairman and Chief Executive Officer. He will contribute his existing shares to the new company, on top of a 'substantial' additional cash investment. As with other hardware manufacturers in the space, Dell faces the specter of a softening PC market. And while Dell has made significant efforts to penetrate other markets—including the launch of a private cloud architecture based on the open-source OpenStack—that weakness has affected its bottom line: for its fiscal 2013 third quarter, the company reported an 11 percent decrease in revenue from the previous year; while it enjoyed an increase in revenue from its servers and services businesses, revenue from its Consumer division dipped 23 percent. Its Large Enterprise, Small and Medium Business, and Public revenue also declined." Another take at the New York Times.

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217 comments

Memo to investors: (0)

davidwr (791652) | about a year ago | (#42797827)

Re:Memo to investors: (5, Funny)

Stargoat (658863) | about a year ago | (#42798113)

More importantly, they are getting Dell tech support.

My condolences.

Re:Memo to investors: (3, Informative)

jd2112 (1535857) | about a year ago | (#42798769)

More importantly, they are getting Dell tech support.

My condolences.

Actually Dell's Enterprise level support is fairly good. Fortunately I haven't had much experience with consumer level support.

Re:Memo to investors: (2)

K. S. Kyosuke (729550) | about a year ago | (#42800001)

Actually Dell's Enterprise level support is fairly good.

The only downside is, you have to pay for it in gold-pressed latinum.

Re:Memo to investors: (1)

Loughla (2531696) | about a year ago | (#42800081)

I have owned one Dell laptop. I had a problem with that laptop, so I was forced to call customer support. It was an awesome experience. They walked me through all the regular nonsense (restart, etc), had me run one diagnostic and tell them the results, and they sent a tech out to fix the issue within a week. Overall, 8.5/10 experience (it would have been higher, but it was a new laptop and shouldn't have had hardware issues to begin with. But the tech was hot.)

Disclaimer: I am not now, nor have I ever been employed by, paid by in any fashion, or at all related to Dell computers. Except for that laptop, that is.

Re:Memo to investors: (1)

ackthpt (218170) | about a year ago | (#42800323)

More importantly, they are getting Dell tech support.

My condolences.

Actually Dell's Enterprise level support is fairly good. Fortunately I haven't had much experience with consumer level support.

Back in the early days of the company had excellent quality products and support was excellent. Much more recently we've elimitated them as a source due to quality issues. Doesn't matter how good the support is if the machines keep failing.

Give the money back to the shareholders! (5, Funny)

Anonymous Coward | about a year ago | (#42797831)

Give the money back to the shareholders!

Re:Give the money back to the shareholders! (3, Informative)

malakai (136531) | about a year ago | (#42797909)

They are. You are getting all shares cashed in for 13.65 a share.

Re:Give the money back to the shareholders! (5, Informative)

microcars (708223) | about a year ago | (#42798561)

OP was a joke, referencing Michael Dell's 1997 comment about how he would fix Apple at the time. His response: "Close it down and give the money back to the shareholders"

Re:Give the money back to the shareholders! (2)

tgd (2822) | about a year ago | (#42798831)

OP was a joke, referencing Michael Dell's 1997 comment about how he would fix Apple at the time. His response: "Close it down and give the money back to the shareholders"

If their stock keeps tanking, that may be a good option in 2014, too ...

Re:Give the money back to the shareholders! (0)

falcon5768 (629591) | about a year ago | (#42799183)

you wish. Apple's stock is not going even near their 1997 numbers for a long long time. Get a god damn grip, Apples going to be around for a long while, especially when they are the biggest single share of the mobile market, bigger than even Samsung when you break down the numbers and OS.

Re:Give the money back to the shareholders! (5, Insightful)

dunkelfalke (91624) | about a year ago | (#42799217)

So was Nokia, not so long ago.

Re:Give the money back to the shareholders! (1)

vakuona (788200) | about a year ago | (#42800207)

But Nokia didn't have $130bn just lying around. $130bn changes everything.

Re:Give the money back to the shareholders! (2)

ackthpt (218170) | about a year ago | (#42800341)

But Nokia didn't have $130bn just lying around. $130bn changes everything.

Repeat after me: It's all on paper.

Amazing how little a company is worth when the stock starts sliding.

Re:Give the money back to the shareholders! (0)

Anonymous Coward | about a year ago | (#42800411)

Bigger than Samsung if you apply a very narrow and specific set of criteria. That's how all Apple fanboys justify Apple's behavior and products.

Re:Give the money back to the shareholders! (0)

Anonymous Coward | about a year ago | (#42799953)

Ah, mindless apple bashing from tgd. Shocking.

Re:Give the money back to the shareholders! (0)

Anonymous Coward | about a year ago | (#42799453)

Unless you bought dell shares before 1998 or during the recession(s) you are getting screwed.

near future (3, Insightful)

Anonymous Coward | about a year ago | (#42797925)

No Linux support at all...

Time to support system 76 with my dollars.

Re:near future (1)

realityimpaired (1668397) | about a year ago | (#42798585)

Which would be nice if System 76 made a 12.1" or 13.3" laptop with an SSD, no optical drive, and a matte finish screen....

Re:near future (1)

marsu_k (701360) | about a year ago | (#42798701)

...which they don't. Try this [asus.com]. Granted it doesn't come with Linux preinstalled, but in my experience the only thing that doesn't work out of the box is Optimus (for which there is Bumblebee - a hack, yes, but most of the time discrete graphics is not needed). Not affiliated, just liking mine.

Re:near future (1)

poity (465672) | about a year ago | (#42798855)

It's surprising they don't offer a premium ultraportable. Linux users are known to be willing to pay top dollar (look at humble bundle stats), especially the IT professionals who have money to burn, yet they insist on selling consumer level models.

Re:near future (1)

CastrTroy (595695) | about a year ago | (#42799177)

Ultraportables require too much customization for the small market that System76 can reach. If you've ever looked at the innards of the Mac Book Air, you'll notice that just about everything is custom, including, and especially, the battery. Larger laptops just use a bunch of standard cells in a custom plastic covering. But you can't do that with ultraportables because the standard cells are too thick. If they could do it, they'd basically be taking a Lenovo ultrabook, and putting Linux and their own badge on it. But then I doubt they'd be able to do so for a better price than what Lenovo can offer for the exact same hardware.

Re:near future (1)

Nerdfest (867930) | about a year ago | (#42798765)

I just picked up one of their machines ... I'm a very happy camper. The "No Windows Tax" is just icing on the cake.

Re:near future (4, Insightful)

Grishnakh (216268) | about a year ago | (#42798853)

I thought the "Windows Tax" wasn't really an issue though: people have complained many times before how Dell would offer a PC with Windows and Linux, and the Linux version would cost more, and it turned out the reason was that, even though the Windows license added to the cost, it was more than made up for by the kickbacks they got from all the crapware pre-loaded. Effectively, the crapware helped subsidized the computer. So if you're just going to wipe the HD and install Linux, a computer subsidized by crapware can be a pretty good deal.

Re:near future (1)

CastrTroy (595695) | about a year ago | (#42799301)

Also, at $659 for their cheapest laptop, it sure feels like there's some kind of tax on there. For the same price you could get a much better machine from any of the other guys (HP, Acer, Toshiba, etc.) Plus they have plenty of selection at lower prices if you don't want to spend as much.

Re:near future (1)

tgd (2822) | about a year ago | (#42798849)

No Linux support at all...

Time to support system 76 with my dollars.

Don't be a moron. Not only is Microsoft not a controlling investor, they're not an investor at all!

And, of course, if you want to run Linux, a particularly nice option is the single-click install of Linux in an Azure VM... hosted by Microsoft... supported by Microsoft...

But, sure, a loan from them means no more Linux from Dell.

Intelligent (1)

roman_mir (125474) | about a year ago | (#42797933)

So they are realising the burden of the SEC regulations and the risk of holding cash reserves rather than their own stock. Their own stock will go up in value relative to the USD because of the inflation, holding cash in a bank (especially USD) is a bad idea the inflation is so bad. Holding to your own stock is a much better deal.

But don't buy government or private bonds, you will get seriously hurt.

Not on the cash (2)

alexander_686 (957440) | about a year ago | (#42798055)

You may be right on the cost of Sarbanes Oxley compliance but I think your wrong about the cash.

IIRC, over half of the cash is being held overseas from un-repatriated foreign profits. As long as Dells’ overseas subsidiaries hold onto the cash they don’t have to pay corporate tax on it. The second it comes back they do.

Re:Not on the cash (1)

roman_mir (125474) | about a year ago | (#42799399)

I am talking about inflation of all currencies of-course, but right now USD, UK pound and Japanese Yen are the worst offenders.

Of-course there is a big difference between Japane and USA. Japanese central bank holds 1.3Trillion reserves in US Treasury bonds and USD, Japanese population holds another 2Trillion, so at least in theory before Japan collapses USA has to collapse, because Japan can call the debt.

In practice USA can't return any of its debts (see my signature).

I am talking about the coming bond collapse and USD crisis.

Re:Intelligent (0)

Anonymous Coward | about a year ago | (#42798243)

What inflation?

Re:Intelligent (1)

Anonymous Coward | about a year ago | (#42798329)

You know, where the price of goods keeps going up in nominal terms; kind of like how a standard desktop PC used to be priced at $3,000 back in the early nineties and is now within spitting distance of $300.

Oh, wait, maybe this industry is different.

Re:Intelligent (2)

alexander_686 (957440) | about a year ago | (#42798957)

Cash always returns about zero percent. Inflation today is low – but interest rates on cash are somewhere around .1%. But even during normal times, interest on cash accounts are about the same as inflation. Basically, cash sits on the book with no economic impact.

The common wisdom is that it’s best to give excess cash back to the shareholders. If the shareholder (owner) wants they can reinvest it in dell – or they can decide what to do with it.

Well... (0)

Anonymous Coward | about a year ago | (#42797949)

What will be the result? Another dead company after they pump and dump it as a public company in a few years? Or a company worth a damm.

Gonna have to make some quality consumer products for that second option...

Smart money is on the first tho.

Re:Well... (0)

Anonymous Coward | about a year ago | (#42798079)

What will be the result?

Their substandard tech support will get even worse. The folks in <insert name of country here> will farm it out to some place lower on the totem pole.

Re:Well... (0)

Anonymous Coward | about a year ago | (#42798215)

“I believe this transaction will open an exciting new chapter for Dell, our customers and team members,” Mr. Dell said in a statement.

Specifically, chapter 7. [wikipedia.org] Very exciting!

What would I do? (-1)

Anonymous Coward | about a year ago | (#42797979)

I'd shut it down and give the money back to the shareholders.

Good maybe (5, Insightful)

Dyinobal (1427207) | about a year ago | (#42798011)

Good maybe, they can get back to providing a good service/product for reasonable prices and a modest profit rather than the 100% as much money as possible even at the expense of future profits model that the current corporate culture in the world seems to mandate as the norm.

Re:Good maybe (0)

Anonymous Coward | about a year ago | (#42798153)

Maybe they'll have enough money for L3 support staff with basic IT skills again. It's like someone convinced a budget-boss that a "Technical Account Manager" meant someone who knows how to get things done, instead of someone who just licks ass incredibly well.

Re:Good maybe (0)

Anonymous Coward | about a year ago | (#42798377)

Don't underestimate how far a good rimjob will take you in life. You can spend years in college, or just learn to love eatin' ass.

So buy Dell shares now? (0)

Anonymous Coward | about a year ago | (#42798019)

So it is currently selling for 13.38 a share. Does this mean we could buy it now and make 27 cents a share when this deal goes through?

Re:So buy Dell shares now? (2)

alexander_686 (957440) | about a year ago | (#42798185)

Yes.

It won't close for another year, so you could treat that 27 cents as intrest. Also, there is a chance the deal could fall though - and which point the price may well drop.

Re:So buy Dell shares now? (1)

vlm (69642) | about a year ago | (#42798459)

you could treat that 27 cents as intrest.

That would be filed on your 1040 as a capital gain BTW... And taxed at capgain rate, long term if you buy now (not advised, just saying)

Re:So buy Dell shares now? (0)

Anonymous Coward | about a year ago | (#42798197)

So it is currently selling for 13.38 a share. Does this mean we could buy it now and make 27 cents a share when this deal goes through?

Yes ... you could earn ~ 2% on the transaction, minus the transaction fees, taxes, etc.

Re:So buy Dell shares now? (2)

vlm (69642) | about a year ago | (#42798281)

So it is currently selling for 13.38 a share. Does this mean we could buy it now and make 27 cents a share when this deal goes through?

Yes. There is one tiny little problem. That's about a 2% total rate of return and they're not completing the sale for about a year and a half. And you get to pay commission to buy the stock out of your fabulous profit opportunity. Also you'll get to pay capgains tax on your "winnings" when it goes up 27 cents. There's probably an easier way to get a laughable one percent or so APR return. Assuming all goes well of course, which it probably will. Although most deals have some kind of clause where if something completely nuts happens the deal is off. So (trade?) war with China and the stock drops to $2 and you're out quite a bit of money. Or the private equity firm experiences legal issues preventing the deal from going thru. Or who knows. In other words I would not suggest cashing out the 401K and putting it into Dell stock at this time.

dude you are getting into the private club (0)

Anonymous Coward | about a year ago | (#42798035)

dude you are getting into the private club

Nokia welcomes you, Dell! (3, Insightful)

yeshuawatso (1774190) | about a year ago | (#42798041)

Any deal with Microsoft in the title is destined for failure. Just ask Nokia [bgr.com] how that's worked out for them so far.

Re:Nokia welcomes you, Dell! (2, Informative)

darjen (879890) | about a year ago | (#42798263)

Really? according to that article, Nokia has turned back into a profitable company.

Re:Nokia welcomes you, Dell! (0)

Anonymous Coward | about a year ago | (#42798803)

Profitable but insignifigant and no longer a big player with impact in the market space.

Re:Nokia welcomes you, Dell! (0)

Anonymous Coward | about a year ago | (#42799107)

Profitable but insignifigant and no longer a big player with impact in the market space.

Which they were even before the Microsoft deal, so what's your point?

Re:Nokia welcomes you, Dell! (0)

Anonymous Coward | about a year ago | (#42800287)

They had their own direction before, now their executives have been taken over by a parasitic CEO from.....Microsoft!

Self determination is far more profitable than guided obsolescence.

Sure, that is easy (5, Funny)

SmallFurryCreature (593017) | about a year ago | (#42800351)

Nokia has stopped with R&D, fired loads of staff and outsourced its production to cheap countries.

Its strengths were its serious R&D, the loyalty of its staff and its Scandinavian build quality.

You can ALWAYS turn a profit by slaughtering yourself, organs sell for a lot, just sell them off and you will be RICH! And dead. But RICH!

Re:Nokia welcomes you, Dell! (1)

alexander_686 (957440) | about a year ago | (#42798315)

In a 24b deal we are talking about a 2b loan. So, first, it’s small. Second, it’s loan, not equity. So no control.

(Which I find odd – Why is Microsoft acting like a bank? Maybe if it’s a convertible bond (a bond that can be converted to a pre-set amount of stock) - that would make more sense.)

Re:Nokia welcomes you, Dell! (1)

NatasRevol (731260) | about a year ago | (#42798569)

This is an interesting question.

Could it be that other banks weren't willing to give Dell reasonable rates due to their business performance?

No idea, but that seems a reasonable assumption.

Re:Nokia welcomes you, Dell! (1)

alexander_686 (957440) | about a year ago | (#42800285)

I don’t think it’s strictly access to cash.

There are plenty of banks / hedge funds that could do the loan – even if the debt was classified as speculative / junk.

If it were access to cash that would mean Microsoft would be taking on the junior risker part of the debt- which is not the role of a company like Microsoft.

It could be that they are currying favor with Dell by offering cheap loans (i.e. with nothing legally binding) – but I suspect there is a hook in there that we are missing.

Re:Nokia welcomes you, Dell! (2)

DragonWriter (970822) | about a year ago | (#42800281)

Second, it’s loan, not equity. So no control.

Holding a loan can give you influence over the lender, even if it doesn't give the kind of voting rights that equity comes with.

Why is Microsoft acting like a bank?

They aren't. They are acting like a company that has an interest in the deal for market reasons beyond being paid back. If they were acting like a bank (and, therefore, basing their lending decision on Dell's creditworthiness and the overall lending market) rather than an interested market player, there would be no reason for Dell to take a loan from them rather than an actual bank.

Re:Nokia welcomes you, Dell! (0)

Anonymous Coward | about a year ago | (#42800457)

Of course they have some control. First there is a deal set up beforehand outlining Dell's obligations under the loan, second, they don't get all the money at once, and third, there are terms about how the loan gets paid back. This means that if certain criteria aren't met, the loan could become very expensive to pay back.

Michael Dell is being something of a sentamental fool here. He should have just cached out his money. Now he's risking his fortune for no real return prospects.

Does the company come preloaded with crapware? (1)

Anonymous Coward | about a year ago | (#42798053)

Someone had to ask.

Could be the best thing... (5, Insightful)

DigitalSorceress (156609) | about a year ago | (#42798065)

This could be the best thing for Dell.

I'm no economist, but the limited exposure I've had to public companies is that nowadays, it's all about ONLY the next quarterly report.

The way the stock market is pushing things, you can't actually make good long term decisions for your company because the only thing that matters is short term stuff.

By buying back the stock, they're possibly giving themselves the opportunity to take control back and run the company in the best interests of long-term strategy/goals.

Good Luck Dell

Re:Could be the best thing... (1)

alen (225700) | about a year ago | (#42798165)

only for the crappy companies with no future like dell

until a few months ago apple's stock was flying. google is still flying high. amazon is in bubble territory

Re:Could be the best thing... (1)

Billly Gates (198444) | about a year ago | (#42798297)

only for the crappy companies with no future like dell

until a few months ago apple's stock was flying. google is still flying high. amazon is in bubble territory

The reason Apple's stockprice soared was because their magical asset ratios went through the rough as they sat on a pile of cash. Investors only make money if it goes up in price. Not off earnings.

I think one of the reasons the economy is in the shape it is is businesses simply can not expand and make more money. Because doing so will make Excel lower your share price lower when doing the ratios of assets/debts. Accountants and computer programs determine how to run your company and make critical business decisions. Not the CEO.

Personally if I were king (notice I did not say president as I would be called a socialist by the lobbyists) I would require shareholders to own their stock for 30 days before they could resell and each company would be forced to pay a dividend equal to the value of the share.

Then you would not have this silliness. Not every company can generate the revenue like Apple and they could have grown faster if WallStreet didn't force them to horde cash and not invest in themselves so their excel spreadsheets can make them more money.

Re:Could be the best thing... (1)

vlm (69642) | about a year ago | (#42798641)

each company would be forced to pay a dividend equal to the value of the share.

I assume you mean price, not book value. Book value would be kinda harsh aka corporate death penalty with some weird tax consequences.

Personally I mostly dislike dividends for long term speculation. I wanna decide when I pay that tax, not some corporate dweeb deciding for me. Also if I thought they could do something useful with 12 of my dollars, that would seem to be a vote of confidence they should keep their measly 10 cent dividend and do something useful with that 10 cents too...

I do have a handful of blue chip utility stocks that I bought knowing they kick out a certain dividend like clockwork, at least until people stop using electricity LOL. My eventual goal is to use my electric utility dividend checks to pay my electric bill. It only takes $30K or so of stock which is pretty much what I've got. Fundamentally this is a problem with investing in solar panels... I could take on all the complication and effort and risk to fall off the grid for 20 years, or I could pay the same amount for stock and never pay a bill again without having to lift a physical finger and relatively low risk... Hmm.

I think forcing dividend policy changes on everyone else would cause massive unnecessary turmoil in the market. Pretty much any time you change dividend policy you'll automatically be pissing people off aka lowering your stock price, so the only way you'd get corps to intentionally tank their price would be by passing a law that they have to.

Re:Could be the best thing... (1)

Billly Gates (198444) | about a year ago | (#42798781)

I was not thinking of the tax implications. That would need to be fixed.

Historically stocks were ways to gain long term success by taking a piece of the profit and as the company grew so did your payments. This flipping with HFT supercomputers, loading a company with debt to inflate its assets, and other tricks are really harmful long term for investors (real people like you and not bankers) and economic growth.

It makes sense if you own a business to reinvest your capital for expansion for long term growth. You simply can not do that. THe fact that Robert Nardelli was fired [wikipedia.org] after setting huge profits and restructuring for long term growth is just one example. Home Depots stock price did skyrocket up after he was fired but it was after all the structural changes. Wall Steet didn't have patience for it and fired him because they only care about quarterly and with flash trading every millisecond of performance. Basically a few guys with clipboards with accounting degrees canned him because the share price didn't move even though sales doubled!

He invested too much money making Home Depot successful.

Re:Could be the best thing... (2)

NatasRevol (731260) | about a year ago | (#42798703)

Apple was constrained on most of their products last quarter, which lead to their 'poor' 20% revenue growth (for a >$200B revenue company!)

It's Wall Street who is essentially devaluing AAPL with a low PE.

If AAPL had a PE the same that AT&T did (which grows much slower, but a bigger dividend and much smaller earnings) then AAPL's price would be around $1250.
Which shows how Wall Street actually punishes AAPL for not playing the analyst game.

Re:Could be the best thing... (3, Interesting)

alexander_686 (957440) | about a year ago | (#42800071)

First, your premise is wrong. Companies are judged on the future cash they will return to their shareholders – which does factor in growth. Generally speaking most financial analyst look out 10 years. When then do quarterly reports matter so much? Think of running a company as running a marathon. At the beginning of the race you predict the company will run a 6 minute mile. The quarterly results say something different. Is this a temporary result (head winds?), something natural (running uphill?) or does it reflect some fundamental change?

Now, the value of a company that will grow 8% a year for the next 10 years is very different then 12% growth. And some will mock people trying to model something 10 years out – just know that financial analyst know the shortcomings of their model.

Which takes us to Dell. Right now Dell is a fairly boring company – and I would argue that a lot of value investors have invested in the company for that reason. Michael wants to take the company in a different direction. Instead of laying out a 10 year game plan to the investors - which is going to change every 6 months – he is going to take the company private.

As to your post specifically, you have an internal contradiction that I am going to point out. You say that companies are loathed to invest in long term risky ventures to create growth. The answer is to force companies to pay dividends based on sized. So, a company that is cash poor comes up with a brilliant idea that will pay out in the future. The value of the company goes up in value – along with their shares. The company must now pay out dividends with cash they don’t have. Something like this would actually discourage the growth you are looking for.

Re:Could be the best thing... (2)

vlm (69642) | about a year ago | (#42798425)

amazon is in bubble territory

Yeah man Borders is gonna crush them next quarter. Err. I mean Waldenbooks is gonna crush AMZN. Um... Ah yes B. Dalton will get their customers... whoops

Seriously other than B+N are there any "large" booksellers left?

Now I do understand that they, as the main/only player, can crash the whole market, think of Atari in the early 80s. Makes you wonder what'll happen to retail when Walmart bites the dust after destroying all the locals. That would be exciting to watch.

Re:Could be the best thing... (3, Interesting)

Bill_the_Engineer (772575) | about a year ago | (#42798691)

Funny that you mention Walmart (not that I personally like Walmart).

I think Amazon has a lot to fear from Walmart. Walmart adapts well and I see them competing directly with Amazon online in the near future. Barnes and Noble is doing quite well as a book store which may insulate them from the impending Amazon vs. Walmart price war on consumer goods and electronics.

Re:Could be the best thing... (0)

Anonymous Coward | about a year ago | (#42799975)

Right now, Walmart is choking it with their 'site-to-store'. Horribly mismanaged; huge implementation issues.

They could fix it. They also could have lost their former magic touch for such things.

Re:Could be the best thing... (1)

nabsltd (1313397) | about a year ago | (#42798717)

amazon is in bubble territory

Seriously other than B+N are there any "large" booksellers left?

Although I agree that Amazon isn't anywhere near a problem, I suspect that at this point, books are less than 10% of their sales (in terms of dollars).

Re:Could be the best thing... (1)

alexander_686 (957440) | about a year ago | (#42800369)

Yeah man Borders is gonna crush them next quarter

You can have a viable company and be in bubble range – no inherent contradiction.

Take a look at the house across the street – before the bubble it was worth 200k – now it’s worth less – but it still has value.

AMZN is currently at $260 – maybe as a ongoing company it’s only worth $130 with the other $130 based on hopes and dreams of continued growth.

Re:Could be the best thing... (3, Interesting)

rudy_wayne (414635) | about a year ago | (#42798219)

This could be the best thing for Dell.

I'm no economist, but the limited exposure I've had to public companies is that nowadays, it's all about ONLY the next quarterly report.

The way the stock market is pushing things, you can't actually make good long term decisions for your company because the only thing that matters is short term stuff.

This is true, BUT, in this case Dell will be heavily in debt which negates any benefits of going private. Instead of Wall Street demanding an ever increasing stock price, Dell will be under constant pressure from the people who put up $24 Billion and want to see a return on their investment.

Re:Could be the best thing... (1)

Billly Gates (198444) | about a year ago | (#42798361)

How much does Dell make in revenues. If they make 9 billion (I made that up as an example) and do a 7 year loan it can easily be doable. If they make 3 billion and already owe 1 billion in debt then that would be a problem.

Re:Could be the best thing... (3, Informative)

Anonymous Coward | about a year ago | (#42798391)

Dell earns $1.2 per share. That's about 10%. Interest rates on debt are not that high and interest payments are tax exempt. So I doubt unless they screw up the business pretty badly they are going to get through just fine.

Michael Dell and Microsoft are the people putting in most of the money to begin with, and debt holders (banks) cannot put pressure (they are non-voting, by definition, else it would be just preferred stock), so I can't see why this would not work.

On the other hand Michael Dell wants to make it into a services company, that part I am not so sure about

Re:Could be the best thing... (0)

Anonymous Coward | about a year ago | (#42798755)

debt holders (banks) cannot put pressure

I can only guess that you've never been in debt.

(they are non-voting, by definition, else it would be just preferred stock)

Even preferred stock holders don't get paid if there aren't any profits. Debt holders legally must be paid either way and if you can't afford it then you lose your company. That's pressure.

Re:Could be the best thing... (0)

Anonymous Coward | about a year ago | (#42798675)

Pay back the loan and they go away. Wall Street doesn't (unless you kick them to the curb as Dell is doing).

Re:Could be the best thing... (4, Insightful)

Alomex (148003) | about a year ago | (#42798929)

This is true, BUT, in this case Dell will be heavily in debt which negates any benefits of going private.

Not really. Most people who finance private takeovers have a much larger time span in mind. While the stock market cares about the next quarter, a typical private investment fund like Onex, Cerberus or even Berkshire-Hathaway (when acting as a lender) has a time span of 5-10 years in mind. As well they usually the have skin in the game, i.e. they just don't issue debt. They actually own part of the company or have warrants for shares.

Re:Could be the best thing... (1)

GodfatherofSoul (174979) | about a year ago | (#42798413)

Amen to that. In the DotCom era it seemed like the IPO was the goal. Maybe companies will start to see that sometimes running your business the way you see fit is better without a quarterly report monkey sitting on your back. My only concern is I see that Goldman Sachs was in on the deal, so I'm wondering how much blood they drained from Dell on the way out.

Re:Could be the best thing... (1)

Anonymous Coward | about a year ago | (#42798517)

I don't know if history or economics backs this up, but I too hope going private will help Dell improve. (I don't know if moves like this ever work, or make any significant changes)

Indeed companies that go public seem to gradually get worse and worse, providing less value for the customer, treating their employees worse, abusing tax loopholes and other general accounting tomfoolery. It all goes to shit in the name of "shareholder value"

And who are the shareholders? Bad people, the best I can work out. Large financial firms that buy and sell stock in complex, indecipherable financial schemes. Any one holding company could own a significant chunk of any number of large companies.. For a few weeks or months, then they'll own a different set all together. So, basically there is no accountability and no face to any of it.

So when a company says "shareholders" they really mean wallstreet, as a whole. Really, companies just do what a whole bunch of wall street analysts say they should do. Which means we have one of the most corrupt and greedy institutions known to man telling every public company how to run their business.

I've come to believe that the financial sector does a lot more harm than good. That it's basically and institution for leeching wealth from citizens and government and private enterprise alike. Everything it touches becomes worse and less useful. The companies that do well today are powerful and successful and smart enough to tell wall street to go fuck themselves. (Apple, Google come to mind)

Re:Could be the best thing... (2)

LordNimon (85072) | about a year ago | (#42798661)

This buyout is almost identical to what Freescale went through a few years ago. Almost the same amount ($17B), and the proponents are saying the same exact things (able to focus on the longer term because they won't need to worry about quarter-to-quarter earnings, bla bla).

It was a disaster for Freescale. They're still trying to dig themselves out of a mountain of debt, and they've been struggling the whole time. Freescale has had significant layoffs, and it's so dismal there that they have a major attrition problem now.

Re:Could be the best thing... (1)

korgitser (1809018) | about a year ago | (#42798689)

I'm no computer historian, but I cannot remember any company that has survived for long dealing intimately with Microsoft. Except IBM, and that was a really close shave.

Substitute the players for a history lesson (2)

Electrawn (321224) | about a year ago | (#42798107)

Substitute Michael Dell for Sam Zell, and Dell Company for Tribune Company. Here lies the future...

Never trust guys with names that end in 'ell'

Prediction (0)

Anonymous Coward | about a year ago | (#42798115)

I Anonymous Coward predict that the consumer division will be sold to lenovo within 2 years. lenovo will drop desktops and focus on tablets etc.

Dell? (-1)

Anonymous Coward | about a year ago | (#42798179)

Dell? I didn't even realize they were still in business .. last time I tried to order something the process was so unbelievably frustrating and complex we switched entirely to HP.

Re:Dell? (1)

Attila Dimedici (1036002) | about a year ago | (#42799497)

You switched to HP because Dell's order process was so frustrating and complex? Isn't that like switching to Chrysler because you thinks GM's "finish" quality looks cheap?

Dell who? (0)

Anonymous Coward | about a year ago | (#42798275)

Haven't ordered Dell machines for over 5 years now. HP gets all of our business.

Canonical + Dell stupid... now Microsoft owns them (0)

Anonymous Coward | about a year ago | (#42798289)

While I didn't see this coming I knew Canonical's move with Dell was stupid. Dell is already too aligned with Microsoft and is only taking advantage of the situation for public relations reasons. Canonical would be better off teaming up with System76 or better yet ThinkPenguin. Companies who have an interest in the GNU/Linux market succeeding. Or dare I say start there own operations.

Big gamble... (3, Insightful)

erp_consultant (2614861) | about a year ago | (#42798871)

Dell - the company and the person - are taking a very big gamble here. The company has been trying, mostly unsuccessfully, for the past several years to get a foothold in the service business. By most measures they have not done very well. Part of that probably stems from their terrible reputation in PC support in the consumer market. Perhaps they feel shackled by the PC business and quarterly reports and Sarbanes-Oxley, etc. And those are valid concerns.

But...Michael Dell is still going to be in charge. And they are going to have a lot of debt. And PC sales still make up a majority of their profits. In the short term it will probably mean lots of layoffs...particularly for people in the non-service sector of the company.

dell and investors? (2)

nimbius (983462) | about a year ago | (#42799103)

anyone think microsoft is taking a step to owning a hardware platform? uefi + comfortable share in a computer manufacturer theyve had lock-in status with for decades anyhow. All thats left is to dab a bit of solder on those CPU pins and theyre apple in a suit.

fiscal 2013 third quarter??? (0)

Anonymous Coward | about a year ago | (#42799299)

How is Dell already reporting is 2013 third quarter? Exactly what calendar dates are covered by that quarter?

Re:fiscal 2013 third quarter??? (1)

slew (2918) | about a year ago | (#42800417)

How is Dell already reporting is 2013 third quarter? Exactly what calendar dates are covered by that quarter?

In the US, large corporation are allowed to define their own fiscal "year" for financial reporting as long as it is constitent with the rules (basically it must be 52-53 weeks long and close at the end of a month or a day of the week). Dell uses a fiscal year that ends on the friday nearest to january 31st. Often corporations choose fiscal years to match with other similar companies, or to smooth out revenue reporting (e.g., say Q3 captures all of the christmas revenue, minus the returns). The number is set by the year of the 4th quarter.

For example, the US government uses the following fiscal year for FY2013

1st quarter: 1 October 2012 – 31 December 2012
2nd quarter: 1 January 2013 – 31 March 2013
3rd quarter: 1 April 2013 – 30 June 2013
4th quarter: 1 July 2013 – 30 September 2013

a true "Microsoft Computer"? (1)

v1 (525388) | about a year ago | (#42799605)

MS has a game console and a phone. Maybe now they are going to have their own actual consumer computer? Bet the other hardware retailers are gonna just love that...

ignorant question (0)

Anonymous Coward | about a year ago | (#42799773)

Couldn't they just take 1/8 of the 24billion and start a new (private) company that competes with Dell for much less?

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