Slashdot Mirror
Dell Founder Dropped $100M Onto Red Hat
diegocgteleline.es writes "Via google news, I found a article at MSNBC claiming that Michael Dell, Dell's founder and chairman, has droped $100M into Red Hat (Michael himself, not his company). Analyists say that "Dell - neither the person nor the company - is interested in acquiring Red Hat", but one wonders what's behind of this move. A fight against their competence in the server market?"
Once upon a time, Dell had their own SVR4 UNIX Distro. Perhaps Mr Dell has a passion for OS's.
I don't even give Dell a look when considering PC purchases. No AMD cpus.
It's very sad, they have a decent product otherwise.
...but one wonders what's behind of this move.
Couldn't it be that Michael Dell was just donating $100 million out of the goodness in his heart? I mean isn't it POSSIBLE that someone nowadays is just doing something that DOESN'T have an ulterior motive or ISN'T planning on recouping in the future?...... Oh shit, I just read what I actually wrote....nevermind.
Dell - neither the person nor the company
Aha
Maybe he is hoping the stock goes back up to $29 where it was a year ago.... (its at 11 now)
"Competence" = competition
In Spanish, competencia means both, hence this is an easy error for native Spanish speakers to make in English.
What if I do the same thing, and I do get different results?
Sigh. Editors.
but one wonders what's behind of this move.
With a 100 million investment by an individual (and not a corporation) you can bet that Michael Dell thinks this is a good investment. That kind of money isn't chump change, so he must think it's a good risk.
AccountKiller
Michael Dell is just making sure that he has multiple sources for his supplies. Operating systems is just one component in his systems. Only a veriy foolish CEO would tie himself to single source.
He's also tweaking MSFT. MSFT could come back with lower prices (of course, they could come back with higher prices). Dell has enough muscle to pay the higher Microsoft price if asked to.
If I had Dell's capital I might invest a few bucks in an up-and-coming tech stock like RH. It might prove very useful given that Dell have some interest in the cheepo server market.
I'm not saying this points to some massive change in direction, just a little future proofing, and if it all goes wrong he can afford it.
init 11 - for when you need that edge.
if your RTA it sounds like his investment company reviewed the market, found a solid invtestment choice based upon the principals that he specified, and, likely with his approval, invested less than 1% of the money he had with them (not even all of his wealth) in that company.
They're not going to discuss his reasoning but it likely says alot of red hat's market capitalization, nothing more.
"Jedi Business, go back to your drinks"
Even then, Dell might make money on the deal: .
Envy my 5 digit Slashdot User ID!
Actually at the time MSD procured the shares it made a lot of sense. ES3 was set to turn a massive userbase into a load of paying users. It was everyone's ecpectation that a significant portion of professional non-paying RedHat Linux 9 users would convert their systems to the paying model. At the time the expectation was that RedHat would thus generate a healthy amount of liquidity and that is always good for share prices. The market didn't quite play out that way but that is of course with hindsight. MSD's decision was a rational investment. Getting Michael Dell a say in the shareholders meeting is of course the priviledge of wealth and there can be no doubt that Dell's views on the market are not without audience in Raleigh. For MSD to diversify his investements is just sound financial management, I mean would you hedge your entire financial future on Dell Computer?? ;)
speculation of Michael dell actually buying RedHat is, on this information, totally unfounded.
-if at first you don't succeed, stay the heck away from paragliding.
Umm... actually that's not what they say. RTFA! Analysts do not see this as a sign that Dell is interested in acquiring RedHat.
By the way... Analysists? droped? Spellcheck!
I underestimated you guys! I'd have thought that this move, which seems to be his investment group making an arbitrage play, would be overspun as a ringing endorsement of Red Hat by Dell, and Michael Dell. Instead we get "It's a plot!!! A plot to destroy Lunix!!!!"
I also like the way the submitter managed to completely invert the statement about how analysts _do_ _not_ believe this is takeover attempt.
What I'm listening to now on Pandora...
... like all good businessmen, whoever wins the OS wars, he wants to profit from it. If you can't beat them, join them.
Michael Dell has always been a forward thinker (as evidenced by his innovation in sales techniques online) and I would imagine that he sees the potential in Linux. I wouldn't be surprised if his half-hearted attempts to sell Linux desktops were only half-hearted due to MS pressure and threats. MS has Dell and the other OEMs over a barrel. Dell may want his freedom, and Red Hat may be the "get out of MS Jail free" card he needs.
I believe Linux actually is truly desktop ready -- and this is coming from a former Mac guy who relishes his ease-of-use more than anything. If I can use Ubuntu daily, anyone can. And I'm sure Dell has seen Linux's progress as well as anybody else here and is betting on it continuing. He's getting in on the "ground floor", so to speak.
So, it wasn't Michael Dell, then. Nor was it Dell, the famed computer vendor. That only leaves Del Boy from 'Only Fools and Horses'. Heh, those crazy Cockneys and their money-making schemes! I bet they mess it up and wind up penniless again!
Whence? Hence. Whither? Thither.
$100M accounts for 1% of his estimated cash value... so not really a big risk for Michael.
The irony, which few people appreciate today, but which will become painfully obvious within the next decade, is that there is more money in free software than in the commercial variety.
Dell is putting some cash on the obvious Linux market leader. Personally, I'd put my $100m on Novell.
Oh, and where "is" the money in free software? That's the lovely part. It's not in the software at all, but in the explosion of valuable products and services that it enables. We're only at the start of this process, it's barely visible.
My blog
Dell pre-installs Red Hat on all server machines to be sold.
Friday's headline:
Michael Dell sells shares in Red Hat for big profit.
Maybe he just sees it as a nice stock to make him more money? It would take far more than 100M to even start thinking of a takeover. Though 100M will put them in 1st rank when it comes to Share %. At most I see him not liking the way the company is going, and thinks that pouring money in and getting a rather loud position among it's shareholders will allow him to better guide the company. He doesn't want them to fade into oblivion and get stuck with a SuSE/Novell vender lock. As for the claim that they want to fight against their competition(I'm guessing the OP ,meant to type this as competence makes little sense) in the server market? What? They use SuSE/Novell, what would the lessening of option get them?And how does RedHat have anything to do with their competition with IBM or Sun? Who happen to also use RedHat.
Please, try not to sound so stupid...
Couldn't $100M just as easily have bought him the infrastructure to launch his own distro? Dellinux, Dellibian, Dellux(e), etc... That would have been an interesting precedent to set.
denentures are debt. Michael did not invest in Red Hat in the sense that he bought into the companies long term success. He loaned them money. If they can't pay it back, Michael's $(99.5*10^6) may not be sunk. It might be a secured loan. I'll admit, I did not RTFA carefully enough to know if it is secured or not. Of course if the rate of return is high enough it's unlikely that RHAT won't be around long enough for principal recovery to be gravy on the steak.
:-)
My $12K in Novell stock is different. It represents faith in the company as opposed to faith in the company being able to pay me back.
Then again, Michael may be playing off Redhat against Microsoft to get bettr pricing, just like he does with AMD&Intel which could well result in the loan paying off many times over for his company, which he owns a lot of, in short order.
Nowthat Senor dillitante investor has spoken, let's here from some folks who know what they're talking about
Dropping $100M sounds like it might crush RedHat. All those dollar bills piled up on top of the roof...
Imagine if they were Sacagaweas. Those poor Linux geeks wouldn't stand a chance with dollar coins raining down on their heads.
I have heard from two different sources, one of them a friend who has worked as strategic management consultant for Dell for about eight years, that Dell is planning on offering the choice of a pre-installed Linux distro(Red Hat?) on all notebooks and desktops by late summer. Perhaps this would at least in part explain the investment mentioned.
before it split. That made it just a little depressing when it was down to $4 around a year later.
Then again, I'm just whining about a $1K investement I made on a lark with their IPO. The dot bomb was obviously MUCH crueler to others than this. I'll shut up now.
Sweet informative mod.
Red Hat has always had people wanting to give them money (as in investment, not just buying shares). From the beginning, Matthew Szulik was adamant about getting investors that brought something to the table besides their chequebook. Michael Dell certainly fits in that category, and i wouldn't be surprised if Red hat lobbied him hard for this investment.
If RH is going to get anywhere on the desktop (their "next move" for the last 18 months), then they will need Dell Computer, and MSD still has some sway there.
This isn't just money, it's money+channel.
davejenkins.com |
How much does $100M weigh? You could get hurt if someone dropped that much money onto you.
--
"Open source is good." - Steve Jobs
"Open source is evil." - Microsoft
No matter how rich Michael Dell is $100 million is no small change. It's pretty obvious that he's as fed up with the MS BS as the rest of the world. He's looking to the future and it's not with MS. Good for him and good luck.
Mr. Gates also invested $100mil in Apple. It's called hedging your bets.
Currently bidding on sig
It was Dell - the asparagus!
Apple buys NeXT, NeXT now rules Apple.
Dell buys into Red Hat, ???
(Just kidding!)
But the interesting point in this debate is who really needs who? IBM Pcs have gone to Lomovo, HP are all over the place so Dell is really the only game in town for the non-mission critical end. Microsoft has to work with Dell and I dare say Dell is not overly happy with the delays to Longhorn which must be impacting the timing of the next upgrade cycle. And all of Dell's own mission critical stuff is already running Linux.
I *any* Dell invested US$100M in a company (ie Redhat) that they were planning on doing future business with, prior to any public announcements they could very possibly be accussed of insider trading.
With all of the class action lawsuits going around these days I would doubt that Dell would want to risk any scrutiny for a "simple" investment. This leads me to believe that Dell has no intentions of significantly altering their current state in relation to Redhat, pre-installed linux, new offerings, etc.
-This sig intentionally left blank
Dell is also sending a message to Microsoft: Just because we haven't embraced Linux at this juncture doesn't mean we won't in the future. It's a good way of letting MS know that he's not in their pocket.
Read the EFF's Fair Use FAQ
... but one wonders what's behind of this move ...
How about doubling or tripling that $100M? RHAT is a volative stock that has some pretty big swings. If you time your purchase right sometime over the next couple of years you may be able to realize a pretty big gain. Linux is becoming more important (fwiw I'm not referring to the desktop) and Red Hat is well poised to benefit from that. I think it is a good medium term investment.
Also to assume some sort of conspiracy is ignorant. Dell is a business. They offer Linux when it is profitable to do so. If you can't order it pre-installed on your desktop box it is because there are not enough of you to pay Dell for adjusting their highly streamlined assembly process. If you think offering Linux is as simple as having a hard drive image handly you are in over your head here.
See what I've been reading.
When you've got multiple billions of dollars in liquid assets, investing one tenth of one of those billions in a company that you like is a no-brainer. Risk, shmisk.
Michael Dell has been a capitalist his whole life, from selling newspaper subscriptions to selling PCs out of his dorm room. He's always been a risk-taker and an achiever. I'm not really impressed with him as a deep thinker, from the few interviews and articles I've seen him do, but that's not his area.
His goal was becoming the top PC maker, even bigger than IBM. His victory in that arena is complete, having driven IBM out of the PC market. Those of us who have watching the computer scene since the '70s should think back to what IBM was then.
Suppose a new kind of car were invented that a guy in his garage could make, and one of those garage hackers figured out how to mass-market his vehicle. If he did it so well that GM decided to get out of the consumer market altogether, that would rival what Dell did.
So what do he do when at 40 having accomplished what seemed like an impossible goal? I'd want my life to mean something besides business, but I'm not him.
I suspect you'll see Dell try to accomplish some new "impossible" goal, whether it's space exploration, a cancer cure, seawater desalination, selling electric cars, or whatever.
I don't know, because I don't dream big enough.
sigs, as if you care.
Only a veriy foolish CEO would tie himself to single source.
That you, AMD?
I was looking at the charts for RHAT (http://finance.yahoo.com/q/bc?s=RHAT&t=1y) and am surprised by its precipitous fall last summer. The stock now trades at half its early-2004 levels. Did they miss their targets and get beaten up by financial analysts? Is this a response to Novell+SuSE? Can it be that analysts really think the SCO suits are going to be successful? I'd guess that, if anything, RHAT may well be victorious in its counter-suit.
Certainly as someone who follows the industry from the sidelines, I can't see anything in the competitive environment that has changed significantly enough in the past year to justify such a fall from grace.
Maybe Michael Dell just thinks RHAT is a good deal at current levels.
Michael Dell is just making sure that he has multiple sources for his supplies.
Would Michael Dell suggesting to Dell the company that they should start using RH more, be a conflict of interests for the other investors? He has a vested interest in both companies. What if he bought a decent size of AMD stock and then within the next few months Dell the company decides to start using AMD chips? Maybe there is no oversight for transactions like that but it sure as hell seems that there should be.
Bad boys rape our young girls but Violet gives willingly.
Micheal Dell is not the CEO of Dell, Inc.
Michael Dell is not a commodity manager for Dell, Inc.
Obviously he has input into the strategy for the company, but I don't think he single-handedly negotiates deals with suppliers.
Michael Dell only needs a single source for the OS on his personal computer. What Dell,Inc puts on their computers is unrelated to this story.
I don't know how much "muscle" Michael Dell has, but I'm sure he has enough "money" to afford the higher cost of a single personal copy of Microsoft Windows XP, if that is what you mean.
I was bored this morning so I decided to check into the facts of this. I am no lawyer or financial expert, but if this even exists -- it looks more like a loan than an investment.
(+1 Funny) only if I laugh out loud.
Not sure why you felt compelled to include the Google News link in the post. But I suspect that is the kind of thing that puts Google News on shaky ground with content providers.
MSNBC prints a story, and you arguably give more credit (by putting the link first) for that content to Google News.
I tried the link and of course got trashed (as I guess everyone but me knows msn.com doesn't play friendly with firefox. So, I opened up an old version of IE (work computer you know...nothing (legal) to be done about it...) to get an annoying, floating, swimming pop up. From whom? Why msn.com, wanting me to take a survey.
Some forms of stupidity are terminal.
I hope.
Investors invest because they want to see a return on their investments. Michael Dell is an investor, he sees an opportunity to make money! It seems simple to me.
I like my women how I like my sugar.. granulated.
Finally, perhaps we'll see computers shipped with an OS that does not suck.
That's impossible, since every OS sucks.
Michael Dell has an investment foundation called MSD investments that has 70 Wall Street investment professionals working for it. Notice that I said "it" and not "him". This is because his foundation is an independent entity that makes decisions based upon increasing the value of his holdings. It's clear that the fund employed an arbitrage strategy by buying the bonds and simultaneously shorting the stock. An alternative to this story could have been that "MICHAEL DELL SHORTS $100MM OF RED HAT'S SHARES!!!" or even further "MICHAEL DELL LOSES $50MM IN CONVERTIBLE BOND VALUE!!!". The truth is most likely along the lines of "MICHAEL DELL EMPLOYS A CONVERTIBLE BOND ARBITRAGE STRATEGY IN RED HAT THAT YIELDS A NEARLY RISK-LESS RETURN OF 11.4% OR 5.3% OVER PRIME!!!". This was not a bet on Red Hat being a good investment, this was a bet to exploit a pricing differential between bond and equity markets.
In other words: Dell is NOT buying Red Hat. Please proceed to pull all panties out of wadded areas.
"Via google news, whilst doing butt-clenches, feeling guilty having had extra marmalade on my toast this morning, I found an article at MSNBC...
In future, please just give us the relevant links. The editors around here are so bad they don't even notice people giving out about them. Editors sans narcissism, what will they think of next?
"A goldfish was his muse, eternally amused"
Clearly, Red Hat is going to be bought out by the terrain feature.
I'm not too much a fan of RedHat. Why couldnt he just invested in Suse? Would of helped me out too since I have some stock in Novell ;)
drope, tr. v. [Scatterhead English, from drop]:
1. To refuse to accept, as in packets.
2. To apply for a mortgage
3. To host a web page but only in German.
4. To aspire to contribute to Wikipedia but only in French.
--Rob
Towards the Singularity.
Dear Mike,
Thanks.
Love,
Tim
XOXOXO
There's another benefit.
There's something to be said for investing in something which is the polar opposite of what your employer (or in Michael Dell's case, company) is doing. In very simplistic terms, it's reasonable to assume that if Linux usage does increase significantly, it'll be at the cost of Microsoft.
This could bite Dell (the company) pretty hard given their close ties with Microsoft. However, as far as Michael Dell is concerned, he's hedging his bets. If Microsoft remains strong, his company wins. If Microsoft loses significantly to Linux (and he can't turn his company into a Linux-lovin' company rather than Just Another Microsoft Box-Shifter pretty quickly), he's still covered.
what we need is for RedHat to use this 100m to develop a standard GUI such as apple's OS X that can mainstream linux into the desktop arena. The window managers now for linux are pathetic compared to apple's desktop management. This could fund a very new and very large step for Redhat and linux in general. does anyone know when microsoft is set to sue over this, claiming the money was actually moneies that was laundred by SCO?
Dude, you're getting Red Hat!
Circumcision is child abuse.
You hit the nail on the head there!
Michael Dell is a BUSINESS MAN. He wants to make MONEY. Red Hat is just that: another revenue stream.
46. The Hobo smiles, his eyes glaze over, and he burps. "Beware the man who has lived longer than the Wasteland."
don't ever drop the soap in martha's presence.
elegant floral bouquet and hollandaise sauce... not appropriate for all occasions.
she's vicious.
The classification of his investment is a matter of semantics, plain and simple. Since Dell, the individual and not the company is making the investment, the company's board of directors and other executives can down play the move. This helps to keep Microsoft at bay, as indicated above.
While I've never worked for Dell, contractor or otherwise, it's no secret that there are quite a few employees that like Red Hat and have been pushing it to the execs for quite some time. This is what lead the company to include it in their server products in the first place.
The timing of the investment is interesting because Red Hat has beaten street estimates due to a rise in subscriptions (found in this CNET article.) This must have the Red Hat development team jumping for joy. Dell's involvement will only drive them to introduce innovative technologies to both RHEL and Red Hat Desktop.
What I believe will happen in the not too distant future is that Dell (the company) will:
* Ante up and start promoting Red Hat based servers more than they have done in the past. While it may piss off MS, they'll respond, albeit gently, it's just business and keep going.
* Create a sales bundle for small to medium businesses that will include an RHEL server and x amount of desktops loaded with Red Hat Desktop. All this with a migration team waiting in the wings to help the company through the initial learning curve.
* Similar sales bundle for larger corporations, including clustering services and SAN related products.
and finally...
* Further collaborate with Red Hat to offer special pricing on multi-tiered support packages for Dell customers switching from Windows based systems. Since Dell already offers Linux training services and the like, it would basically be a strengthening of its partnership.
Only time will tell! We'll revisit the issue in a few months as I'm sure it will garner more attention when Dell (the company) makes a move.
Once upon a time, Dell had their own SVR4 UNIX Distro. Perhaps Mr Dell has a passion for OS's.
I wouldn't be supprised if this was more to do with Microsoft, to send them a message that they don't have the world over a barrel, than it is a passion of OS's. As computers get cheaper, every machine sold with Windows on it is going to be cutting into an increasing amount of profit margin, and just as the industry is getting cheaper - Microsoft is getting more expensive, perhaps this is more like the corporate way of saying f**k U, without putting anything on "Dell" - the company.
Brave boy, but foolish.
:)
Sorry
Hi! I make Firefox Plug-ins. Check 'em out @ https://addons.mozilla.org/en-US/firefox/addon/youtube-mp3-podcaster/
But to have $100M problem like this must be bad no?
Engineering is the art of compromise.
I note that (if I'm not confused or out of date) Compaq is noted for coming out with proprietary hardware that isn't well supported by Linux, while Dell's stuff is more open and supported well.
If that's (still) true, increasing acceptance of Linux in the marketplace gives Dell an increased competitive advantage over Compaq.
(Then again, maybe Dell is just being a nice guy. B-) )
Bantam Dominique roosters crow a four-note song. Once you've heard it as "Happy BIRTHday" you can't NOT hear it that way
if it keep whitebox linux alive longer....seems the owner of the whiteboxlinux.net and whiteboxlinux.com domains has decided to offer them on ebay as a peace offering between wbel and himself.
.net and .org just to reroute people to CentOS.
I'm glad he decided to sell. I always thought it was fucked up of that guy to register the
Most people think Whitebox is dying, however if you go to whiteboxlinux.org (the real site) it says another story.
That said, CentOS is probably the best ticket right now. TaoLinux has dropped amd64 for v.3 and Whitebox is always a few steps behind. CentOS seems to be on it, and releasing updates at near RH speed.
Whitebox may be the first RHEL cloner, but it is a one man show, and is showing the bottlenecks. It's nice of the guy to share his work, but it doesn't seem sustainable to me.
Can I get an eye poke?
Dog House Forum
Yes, it is called SEC, i believe. And the offense is called insider trade information. This is what happened to that cooking lady on TV, whatever the fuck her name is.
She got caught, who knows what Mr. Dell is going to do.
cat
Dell is already using linux - every Server you order from them without a preinstalled OS comes with a weird linux installation on it that is Dell's OS installation tool. If you want to install Windows, well this tool does it for you. If you ask me, Dell is just offering what they can sell, and there are just not enough people who really want a Server of Desktop with linux preinstalled, there are just too many distributions, and people won't just take any, they want one specific. Similar argumets probably hold true for the choice of CPU manufacturer: if the price/performance ratio is good enough, and most importantly, the box works, few people care who made the CPU.
I dunno why he would invest. I've used Red Hat for years and thought it was fantastic until recently. I recently moved to Fedora Core 3 and it's an unmitigated piece of crap. (Well, in perspective to previous RedHat versions) Many pieces of the software do not work properly. (Try doing a getent passwd --service=ldap someday, it just hangs) Maybe the Enterprise Editions (or whatever they are calling it) are much better but Fedora is junk. I can't recommend it to anyone these days.
based on whether Dell were planning to offer Linux Enterprise desktops or laptops. Who would have more of an interest in a Linux distro than a company that images hard-drives or creates recovery CD's for their own proprietary HW systems?
I think it's just a sign that PC manufacturers hate having to put Windows on every machine they build as much as many of their customers hate having to pay the Windows Tax in order to acquire a premanufactured machine.
Apparently, he is quite oblivious of the SCO threat. Or, he doesn't quite believe in their arguments? Wonder which?
1. Invest $100 million in Red Hat
2. ???
3. Profit!
Bruce
Droped? Spel chekc plaese.
I hate grammar Nazi's.
This wouldn't have anything to do with Intel owning a bit of RedHat given that they were one of the original VCs of RedHat by any chance would it?
And we all know how close Dell is with Intel. They are the last manufacturer to not have adopted AMD aren't they?
Curiosity was framed; ignorance killed the cat. -- Author unknown
Comment removed based on user account deletion
Is it such a great investment? Redhat's history matches a lot of other relatively successful bubble stocks (i.e. its value sucks compared to pre-bubble-burst, and looks pretty good compared to post-bubble-burst but it hasn't done much lately (except jump up a buck following the Dell announcement).
The idea that this is anything other than a message to Microsoft is pretty far-fetched.
hawk