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Icahn Abandons Bid To Prevent Dell From Going Private

Posted by ryuzaki0 on from the everyone-wants-out dept.

Via El Reg comes news that Carl Icahn has, after a brief battle with Michael Dell for control over the company, thrown in the towel. From the article: "Icahn said in an open letter to shareholders that he still thought that Big Mike's $13.88 per share offer for the firm undervalued it, but had decided that it would be 'almost impossible' to win the battle at the shareholder vote on Thursday. 'I realize that some stockholders will be disappointed that we do not fight on,' he wrote. 'However, over the last decade, mainly through "activism," we have enhanced stockholder value in many companies by billions of dollars. We did not accomplish this by waging battles that we thought we would lose.'"

12 of 51 comments (clear)

  1. interesting bit missing from tfs by Anonymous Coward · · Score: 4, Informative

    a main reason why unca carl gave up is that the dell board of directors played like washington politics in __changing the rules of the vote__ so that it (the upcoming vote to approve a buyout bid) favors dell's takeover bid over his... another is that carl's choice of ceo (name unknown, never released publicly?) backed out at last minute.

    1. Re:interesting bit missing from tfs by Xest · · Score: 5, Informative

      I'd imagine the fact Carl is a fucking dick that no one wanted ruining the opportunity to fix Dell for the sake of a quick buck played a fairly large part in that.

  2. Re:May the bastard rot in hell by Anonymous Coward · · Score: 3, Funny

    Come on, even Hell has some standards.

    Send him to where ever it is the investment bankers go.

  3. Re:Two days old? by Big+Hairy+Ian · · Score: 2

    Mostly because all the interesting stories get pushed off the bottom of the submissions board by spammers. However, they did FP a story the other week that was so old it qualified for a state pension.

    --

    Build a Man a Fire, and He'll Be Warm for a Day. Set a Man on Fire, and He'll Be Warm for the Rest of His Life.

  4. Translation by whisper_jeff · · Score: 4, Insightful

    Translation: I've pumped the value of Dell stock as high as I'm going to get it to go so I now have my eyes set on pumping the value of a different company's stock through my "activism".

    I do appreciate that he air-quoted "activism"...

    1. Re:Translation by UnHolier+than+ever · · Score: 5, Interesting

      Or, translation: Michael Dell tried to buy Dell for cheap, Icahn bought some shares and made noise saying it was worth more. Michael Dell ended up paying more. Icahn was right.

    2. Re:Translation by Charliemopps · · Score: 3, Insightful

      yea, but public companies tend to bust. You can shrink a private company, take losses for a while if you want. When you're public the public expects eternal growth or they abandon you, you get bought up and sold for pennies on the dollar and then the company you named after yourself sells its rights to walmart who then sells cheap knock-offs under your name.

    3. Re:Translation by Cassini2 · · Score: 4, Interesting

      On Wallstreet, public companies must always maximize short term profits, whereas private companies can make decisions to ensure long-term profitability. Hopefully, in a big corporation, maximizing short-term profits will also maximize long-term profits. However, that does not always occur.

      A good example of the difference in strategy is the American auto industry. The public companies (GM, Ford, Chrysler) routinely underperform, and often lose money. However, lots of privately held or privately controlled companies consistently make money. Magna is a good example of this. These companies keep a lid on their costs, and do not do anything to impair the long-term profits of the company.

      I was at an analysts presentation on the mistakes GM, Ford, and Chrysler made. Every single mistake involved optimizing short-term profits at the expense of long-term profits. Individually, none of these decisions would have bankrupted GM. However, after a pattern of decades of short-term optimization, GM was broke.

      If Dell wants to compete with HP, they only need to accept a 0.25% less per year return on investment than Wall Street. A private investor can make that decision, because he knows that if the company is well-managed, then the investment will pay off.

      Having access to cheap capital in a discipllined, well-managed company is a huge advantage. The big companies engage in endlessly complicated financial manipulations to boost short-term profits. In a private company the decision is easy: focus on outcomes that maximize the long-term success of the company.

      In a well-managed private company, there is no Enron-like manipulations that destroy the long-term shareholder value. Thus, Dell can adopt a strategy where it ensures its products are competitive and sell, and then wait for HP to implode. After some of HP's recent CEOs, it is a probably a safe bet that HP will implode. That would leave Dell as the only large North American PC vendor, which would be a pretty nice place to be (for Dell).

    4. Re:Translation by realityimpaired · · Score: 2

      Their consumer line is somewhat lackluster, yes.

      Their business line of laptops still comes with NBD onsite warranty. If it was as shitty as you claim, they'd be bankrupt.

      I have a 2-year old Vostro v130n laptop that still works like the day I bought it. The only part that isn't original is the hard drive, and that's not because it failed, it's because I wanted to switch to an SSD.

    5. Re:Translation by Anonymous Coward · · Score: 2, Insightful

      Many of those companies have the "Reduce cost at any expense" mantra well learned.
      Causing them to spend more money on the reduction than the savings from the reduction, on paper it looks good, in reality you are destroying the company.

  5. Now Microsoft, Apple and others by LostMyBeaver · · Score: 5, Insightful

    When a company goes public, it allows professional gamblers buy parts of the company in order to raise money. At this point, these gamblers demand that the company post regular results and news no matter how silly to give them some reason why other gamblers should buy these shares... or vouchers for a higher value. The value of this voucher on the gambling market almost never reflect the actual performance of the company. And the gambler market value has little actual impact on the actual value of the company. It's similar in nature to how betting on a horse doesn't make it run faster. Gambling on a football game doesn't actually alter the results of the game.

    When a company like Dell volunteers to remove itself from the gambling pool because the people who run it feel they'd prefer the value of the company is actually based on the actual results of its performance, it is highly responsible. Like paying off a loan to the bank because you don't need the loan anymore.

    While every experience I've ever had with Dell has been that they're a company full of hackers who lack the ability to do anything other than repackage technology they don't actually understand, I applaud them for setting a great example of financial responsibility even against the will of gamblers who pressure them to behave irresponsibly for their own personal gains.

    I would like to see many other companies take the same path. Other tech companies, food companies, manufacturing companies, etc. The first step to fixing the U.S. economy is to gamble less and behave responsibly.

    Let's hope this becomes a trend. Good job Dell!

  6. Re:Two days old? by gl4ss · · Score: 2

    This is not tthe place to bitch about stale stories, you're offtopic. Use your journal (I see you never have).

    nobody reads the journals. you might just as well post it on your orkut page.

    --
    world was created 5 seconds before this post as it is.