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Dell Going Private In $24.4 Billion Agreement
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.
Give the money back to the shareholders!
No Linux support at all...
Time to support system 76 with my dollars.
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.
Any deal with Microsoft in the title is destined for failure. Just ask Nokia how that's worked out for them so far.
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.
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
The Digital Sorceress
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'
More importantly, they are getting Dell tech support.
My condolences.
Hoist Number One and Number Six.
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.
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.
"Science flies us to the moon. Religion flies us into buildings." - Victor Stenger
> I'm no economist, but
That's ok, they don't know what they're talking about either.
Rich And Stupid is not so bad as Working For Rich And Stupid.
Dude, if you keep buying yourself you're gonna go BLIND!
C|N>K
And the CEO that led them to this place.
There are two types of people in the world: Those who crave closure
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.
Any insufficiently advanced magic is indistinguishable from technology.
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.
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.
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.
Good people go to bed earlier.
The stock market seems to be full of dick heads and no talent people posing as analysts.
Actually Dell's Enterprise level support is fairly good.
The only downside is, you have to pay for it in gold-pressed latinum.
Ezekiel 23:20
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!
MMO Quests are like orgasms:
You may solo them, I prefer them in a group.
So, sparky, anybody who likes Dell systems, and has had good experiences with their support and dares to tell about it on a public forum is, to you, a shill... Have I got that right?? I also like Dell's enterprise systems (Optiplex/Precision/PowerEdge/Latitude), and the support for those systems. Since until about 2 years ago, I'd been supporting about 200 of these Dell systems in my then day-job, and have been doing so for 10+ years, I think I might know a thing or two about these Dell systems, and have some credibility in what I've experienced with their support... But you go right ahead and keep calling people shills who haven't had the same experience as you....
THANK YOU, Edward Snowden!! Americans owe you a debt of gratitude (whether they know it or not..)
You still sound like a shill.
He sounds to me like someone who was a Dell customer a long time ago. Don't forget, they used to have the best-rated customer service in the whole PC market. I was quite happy with them myself back around '96 or so when I was using Dell machines to run NeXTSTEP.
-jcr
The only title of honor that a tyrant can grant is "Enemy of the State."
The primary purpose of the deal is to repatriate a bunch of cash without having to pay corporate taxes on it. A lot of the money originally started in the US, but was hidden overseas. This brings it back. The shareholders all get a premium on the share price, giving them their cut. Dell borrows a bunch of money to pay the shareholders, then uses their offshore accounts to pay the banks back, because loan payments are tax-free. And since it's all capital gains, the shareholders are all paying less on it than you pay on your wages. It's how the 1% rolls - good for them, not so much for you.