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Dell Is Now a Private Company Again

Posted by timothy on from the back-to-the-dorms dept.

Gunfighter writes "StreetInsider.com reports that Dell, Inc. completed its go-private transaction by Michael Dell, Dell's Founder, Chairman and CEO, and Silver Lake Partners, a leading global technology investment firm. Stockholders will receive $13.75 in cash for each share of Dell common stock they hold, plus payment of a special cash dividend of $0.13 per share to stockholders of record as of the close of business on Oct. 28, 2013, for total consideration of $13.88 per share in cash. The total transaction is valued at approximately $24.9 billion."

36 of 151 comments (clear)

  1. Only one more step left... by SuperKendall · · Score: 5, Funny

    Shut it down

    --
    "There is more worth loving than we have strength to love." - Brian Jay Stanley
    1. Re:Only one more step left... by CitizenCain · · Score: 2, Insightful

      Well, yeah, except that Dell was right, in 1997, about what to do with Apple as a company that made computers.

      Of course, it turned out that shifting their core business model from making computers to making gadgets was an even better idea.

    2. Re:Only one more step left... by Wyatt+Earp · · Score: 5, Insightful

      Except for all the success they had with iMac, Powerbook G4, iBook before iPod

    3. Re:Only one more step left... by fuzzyfuzzyfungus · · Score: 4, Interesting

      Strictly speaking, it's probably most accurate to say that Dell was right about Apple 1997 except that they'd just recently made; but not yet seen the payoff from, the choice to get Jobs and NEXT.

      Their "Hey, let's sell a confusing selection of increasingly antique PPCs in beige cases for increasingly risible prices, on the strength of our mostly-obsolete OS" strategy wasn't going anywhere, and would only have gotten worse as time went on (The price/performance of Wintels was improving, the sheer nastiness was decreasing (remember the good old days before bootable ATAPI CD drives and other basics? That's the kind of shit that made Apple's tendencies toward SCSI seem classy rather than merely expensive), and Apple's in-house attempt to modernize Classic MacOS was a miserable failure).

    4. Re:Only one more step left... by harperska · · Score: 3, Insightful

      There is a massive difference between taking it private and buying out the shareholders for the purpose of shutting it down, even if the first step looks the same on the surface. I have no idea what Mr. Dell is planning, but in general operating a business in a way that makes shareholders happy is not necessarily the best strategy for a technology company. Shareholders want to see the goods on a quarter-by-quarter basis, and if a particular quarter is down, the shareholders interpret that as a hiccup in the company's strategy and punish the stock accordingly. However, running a technology company requires a long-term view of the future, and a roadmap for how to get there. That roadmap may require some sacrificial quarters where emphasis is put into future R&D rather than maximizing current sales. If done properly, future awesome technology to come from that R&D more than makes up for a couple of flat quarters. But the markets don't see it that way. So the only way to be able to fully achieve the potential of the roadmap is to take the stock market out of the equation.

    5. Re:Only one more step left... by sootman · · Score: 3, Informative

      As much as it's fun to make fun of him now, there are 2 things to remember: 1) Apple was in pretty bad shape in 1997 -- a year before the iMac, 4 years before the iPod. 2) He's the CEO of the competition -- what would you expect him to say? "They're in trouble, but Steve is a great guy, he's done some creative things in the past, they should stay the course, work hard on making great products, and maybe someday they'll wipe up the floor with us!"

      It's not like he's the only CEO to ever do this.

      Exhibit A:

      Clark is not afraid to publicly dis a company like Apple, much as Steve Jobs once mocked IBM.

      "Apple," Jim Clark will sigh, as if he were talking about a horse on its way to the glue factory. "They're not doing anything... Apple blew it."

      Then, with a dismissive wave of his hand, and just the hint of a grin: "I think they're in serious trouble."

      -- SGI founder & chairman Jim Clark in Wired, 1994

      Exhibit B: Steve Ballmer laughing at the iPhone

      His complaints about the iPhone were somewhat valid at the time, but 1) he forgot that people WILL pay for a good product, and 2) if he wasn't aware of how Apple refined the iPod over the previous six years -- making it better and cheaper every year -- he's dumb as a rock. Oh wait, he was aware:

      Business Week: How much money will you lose per Zune?

      Ballmer: None. Apple put the hammer down there, dropped the price down to $249. If they had been $299, it would have been nicer. They have the advantage of scale. So we're at $249, too. We don't make a lot of money, not to start out.

      So I just mark that down to "standard CEO bluster." Or maybe he really was that stupid.

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    6. Re:Only one more step left... by icebike · · Score: 5, Insightful

      Except those were NOT that successful, and those were precisely the computers Dell was talking about and which were sinking Apple at the time.

      Jobs vision was that he had to stop relying on desktop computers because he was clearly losing that war in spite of a few partially successful products. His vision saved the company by moving to gadgets, and letting the computer side play catch up. Jobs pretty much followed Dell's advice, pulling almost all the R&D money away from computers. He shit-canned his own operating system, went out and grabbed FreeBSD, Konqueror, and Cups, and packaged it to keep the faithful happy while the real effort went into the iPhone.

      Only his pride prevented him from killing off the computer line altogether.

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      Sig Battery depleted. Reverting to safe mode.
    7. Re:Only one more step left... by SethJohnson · · Score: 2

      4. Or he has colluded with Icahn to depress the stock price such that the company is valued less than what he can get by chopping it and selling the components off. Between that number and $24.9 billion lies his profit.

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    8. Re:Only one more step left... by zieroh · · Score: 4, Informative

      Your grasp of history is weak, or perhaps just willfully ignorant. Michael Dell uttered those words in late 1997. The iMac was announced in 1998.

      --
      People who say "sheeple" have about as much sophistication as an AOL user, and in fact are probably actually AOL users.
    9. Re:Only one more step left... by icebike · · Score: 2

      Jobs didn't "shit can his own operating system", Jobs switched from the System 7-OS 8 operating system to Jobs own NeXTStep/Mach kernel approach

      Lets face it, without the totally free BSD operating system Apple would have been dead. He took the cheap way out, lashing up and locking down open source software.

      Your own link says as much:

      Meanwhile, Apple was facing commercial difficulties of its own. The decade-old Mac OS had reached the limits of its single-user, co-operative multitasking architecture, and its once-innovative user interface was looking increasingly outdated. A massive development effort to replace it, known as Copland, was started in 1994, but was generally perceived outside of Apple to be a hopeless case due to political infighting. By 1996, Copland was nowhere near ready for release, and the project was eventually cancelled. Some elements of Copland were incorporated into Mac OS 8, released on July 26, 1997.
      After considering the purchase of BeOS — a multimedia-enabled, multi-tasking OS designed for hardware similar to Apple's — the company decided instead to acquire NeXT and use OPENSTEP as the basis for their new OS. Avie Tevanian took over OS development, and Steve Jobs was brought on as a consultant. At first, the plan was to develop a new operating system based almost entirely on an updated version of OPENSTEP

      NextStep is simply a thin skin on top of BSD.

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      Sig Battery depleted. Reverting to safe mode.
    10. Re:Only one more step left... by Aereus · · Score: 3, Interesting

      We'll have to see the direction he chooses to take the company now. As I understand it, before "Dude, you're getting a Dell!", Dell was actually known for making fairly good systems for a major brand. I remember working for CompUSA in the late 90s, and any Dell system we sold was required by them to go through a lengthy systems diagnostic process before being released to the customer. And some of their LCD monitors are known as being among the best. (Everyone raves about the U3011, etc.)

    11. Re:Only one more step left... by peragrin · · Score: 2

      you can just remove every instance of the word "technology" from your statement.

      Wall street only cares about this quarter. six, twelve, twenty four months down the line is far to long for Wall street. Wall street is a legal form of gambling and nothing else. real investors who actually want companies to plan for the future stay away.

      Take a look at Iridum. it took several bankruptcies before it became profitable. however if you look back at the original plans iridum still became profitable at roughly the same time it just took a lot of initial investment to get setup. but once setup up it is good. The thing is investors won't wait 20 years for profits they want them next quarter.

      --
      i thought once I was found, but it was only a dream.
  2. Michael Dell hoisted with his own petard by JoeyRox · · Score: 4, Interesting

    October 6, 1997, Michael Dell was asked what he would do to fix Apple. His answer, "What would I do? I'd shut it down and give the money back to the shareholders". Well Dell has returned money to his shareholders. The Smartphone and Tablet industry will take care of the shutting-down-Dell part in due time.

    1. Re:Michael Dell hoisted with his own petard by sqrt(2) · · Score: 2

      Enterprise customers still need millions of new workstation traditional desktops/laptops every few years. They're especially big in the medical and education markets where tablets and smart phones don't make sense.

      If anything, it's MS with their abhorred Windows 8 that's threatening Dell's traditional business success. Luckily, Windows 7 will be around until 2020.

      --
      If you build it, nerds will come. Soylentnews.org
    2. Re:Michael Dell hoisted with his own petard by DogDude · · Score: 2

      The Smartphone and Tablet industry will take care of the shutting-down-Dell part in due time.

      My business runs on computers, not toys. People will need actual PC's for a long time to come. Very few people need gadgets.

      --
      I don't respond to AC's.
    3. Re:Michael Dell hoisted with his own petard by alexander_686 · · Score: 4, Insightful

      It’s high end services, not high end computers, that M. Dell really wants to do is sell.

      Take a look at what companies Dell has been buying recently. They have been high end high touch hardware (IIRC in the storage market) and consulting services. He wants to go down the same road that IBM and HP have travled.

    4. Re:Michael Dell hoisted with his own petard by DNS-and-BIND · · Score: 2

      In 1997 I would have closed down Apple too. The company was a wreck.

      --
      Shutting down free speech with violence isn't fighting fascism. It IS fascism!
    5. Re:Michael Dell hoisted with his own petard by unixisc · · Score: 2

      October 6, 1997, Michael Dell was asked what he would do to fix Apple. His answer, "What would I do? I'd shut it down and give the money back to the shareholders". Well Dell has returned money to his shareholders. The Smartphone and Tablet industry will take care of the shutting-down-Dell part in due time.

      Michael Dell's comment was made when Apple was having problems getting any native fully multitasking OS out for their PowerMacs, and bleeding red ink as a result, and going from one strategy to another - one day System 7 (emulated), another day Copeland, another day Pink/Taligent (anyone remember that?), another day BeOS and finally the acquisition of NEXT. What Apple would do later was beyond what was then foreseeable. And by the time Apple did get OS X out, Windows NT had won the battle for the desktop, and so Apple now had to venture into iPods, iPhones & iPads.

      Here, Dell has returned the money to the shareholders, and are now fully free to make sensible long term decisions w/o worrying about short term implications, even though their ability to publicly raise money from Wall Street is somewhat hampered. Dell doesn't have to make smartphones or tablets, since it knows that Apple & Samsung have that market sealed up. They don't have to continue making PCs if they see the margins remaining as thin as they are. They even have the option of fully becoming Perot Systems and just doing IT services, and leave the PCs to the likes of Acer, Asus & Lenovo, if the PC market doesn't improve.

      So Michael Dell made a reasonable comment in 1997 on Apple, and right now, he's made the right decision wrt Dell. With Wall Street off his back, he can now make sensible decisions for his company w/o burning its long term prospects for short term PR exercises

    6. Re:Michael Dell hoisted with his own petard by rk · · Score: 2

      I heard this from mainframe and midrange people 20+ years ago. I'll bet they heard it in the 60s and 70s from people who said their businesses ran on paper, not machines. Since mainframes and paper are still around and doing fine, you're half-right, but those people missed the boat on the revolutions of their time, dismissing them as "toys" and fads just as you have dismissed tablets and smartphones. Those toys are more powerful than the desktops of 10 and in some cases just 5 years ago.

      I agree that nothing beats the PC for heads-down creation and data manipulation, but it's not due to the underpowered nature of these devices, but in the human/machine interface. Foldable, wearable or projection displays, better virtual keyboards, and/or advanced 3D gesture sensor systems or something else better minds that mine will think of are what will blur the lines between PCs and portable devices in the future, the same way faster and higher capacity ICs and disk drives blurred those lines between PCs, workstations, and big iron over the last two decades.

    7. Re:Michael Dell hoisted with his own petard by nitehawk214 · · Score: 4, Insightful

      Dell has gigantic portion of the business market. desktop workstations, laptops, and servers.

      So did Sun at one point.

      --
      I'm a good cook. I'm a fantastic eater. - Steven Brust
    8. Re:Michael Dell hoisted with his own petard by green+is+the+enemy · · Score: 2

      The only difference being lack of vendor lock-in.

  3. Not bad by postmortem · · Score: 4, Interesting

    Dell has one less thing to worry about: quarterly profits and revenue. This is right thing for struggling or declining companies. "analysts" won't bug them every moth how their market is shrinking and sales declining. Bet employees will feel safer too without threats of layoffs every time they don't meet "expectations"

    1. Re:Not bad by Anonymous Coward · · Score: 2, Interesting

      You're right except for the part about layoffs. Layoffs aren't driven by stock prices, for the most part they're driven by internal numbers. This is how a profitable company can justify laying off workers that just aren't productive or at least productive enough. A company may use their decline in stock value as an outward indicator of why they're laying people off to the public but those decisions were made behind closed doors well in advance of any public knowledge.
       
      A CEO and his board don't wake up one morning to a drop in stock price and scream "we need to lay people off, NOW!!" It's a bit more sophisticated than that even if you don't agree with the layoffs.

    2. Re:Not bad by alexander_686 · · Score: 2

      Leverage (i.e. the debt to equity ratio) affects the volatility and risk of the equity holds. It has no effect on EBIT. Dell was also kicking out a lot of free cash so I don’t think there is going to be an issue on servicing the debt.

      If there are layoffs it’s not going to be to meet debt payments. It is because M. Dell wants to get out of the low margin commodity end of the market and move upscale into high end services. I have seen some hiring on that front.

    3. Re:Not bad by tomkost · · Score: 2

      The company does not own those debts. Those are owned by the investors who bought the company and took ownership.

    4. Re:Not bad by alexander_686 · · Score: 4, Informative

      Nope, those are corporate debt. It’s standard practice in a Leverage Buy Out. A close analogy is when you refi your house and pull cash out. The value of the house remains the same, your personal value remains the same (both assets and liabilities increase by the same amount) , it just your debt to equity ratio increases.

    5. Re:Not bad by Anonymous Coward · · Score: 2, Insightful

      A CEO and his board don't wake up one morning to a drop in stock price and scream "we need to lay people off, NOW!!" It's a bit more sophisticated than that even if you don't agree with the layoffs.

      Right. It's the boys from McKinsey break the news to the CEO that after camping out in the conference room for six weeks.

  4. Sweet! So when is the IPO? by Marrow · · Score: 4, Funny

    I mean, given the climate is there really a doubt there will be one?

  5. Will Dell resurrect Project Ophelia? by jkrise · · Score: 3, Interesting

    since they are no longer bound to share-holders; and can innovate for the sake of innovation? No need to bow down to MS Overlords and do as they or the so-called markets please. They can afford to lose a billion bucks in chasing their own dreams.

    --
    If you keep throwing chairs, one day you'll break windows....
    1. Re:Will Dell resurrect Project Ophelia? by jkrise · · Score: 2

      Replying to myself.... found this recent link talking about the possible launch of the product in December. Bad news for MS I guess:
      http://www.eweek.com/pc-hardware/slideshows/dell-moves-forward-with-project-ophelia-cloud-device.html/

      --
      If you keep throwing chairs, one day you'll break windows....
    2. Re:Will Dell resurrect Project Ophelia? by IYagami · · Score: 3, Informative

      since they are no longer bound to share-holders; and can innovate for the sake of innovation? No need to bow down to MS Overlords and do as they or the so-called markets please. They can afford to lose a billion bucks in chasing their own dreams.

      Well... MS Overlords have lent Dell $2 billion.

      http://www.pcworld.com/article/2048627/dell-goes-private-as-shareholders-approve-249-billion-deal.html

      "Dell on February 5 announced that Michael Dell and investment firm Silver Lake had offered $24.4 billion, or $13.65 per share, to buy out the company. The offer, subject to shareholder approval, included a $2 billion loan from Microsoft, and debt financing from Bank of America, RBC Capital Markets, Merrill Lynch, and Barclays."

    3. Re:Will Dell resurrect Project Ophelia? by alexander_686 · · Score: 2

      I don’t think so but I am still scratching my head over the loan.

      Bondholders have no say in how the company is run. Well, unless the company goes bankrupt. Of the cash needed it was only a small slice. There was the chance to get an equity slice but MS passed. Maybe for good will but it still confuses me.

  6. Re:This can be a good thing by CastrTroy · · Score: 3, Insightful

    I would love to see someone else copy Apple in one regard. Make less choices for the customer. There doesn't need to be 10 different desktop models, and 10 different laptop models. Apple has 3 desktops (mini, iMac and Mac Pro), while allowing the user to choose a few basic options like amount of RAM, hard drive space, and processor speed. And they have 2 models of laptops. Customers know exactly what they are getting with Apple, and they know when there's a new model available, because it only happens once a year. With Dell, and other PC manufacturers, there's tons of different models, nobody really knows how to compare one to the other, and you never know how old the current model is, and when the new model is coming out.

    --

    Anthropic principle: We see the universe the way it is because if it were different we would not be here to see it.
  7. Re:This can be a good thing by Skarecrow77 · · Score: 2

    New models come out when intel releases a new processor architecture.

    the rest I agree with you about though.

  8. Your tax dollars at work by Animats · · Score: 4, Interesting

    Going "private", right. The money supposedly comes from Silver Lake Venture Partners. But they don't have $24 billion. Most of it is borrowed. From banks. Which borrow it from the Fed at very low rates. Which creates Government debt to pay for it.

    "Private equity" today is really equity to debt conversion. With interest rates so low, that's very attractive to management.

    This is "quantitative easing" at work.

  9. There's one thing that has to be said... by Megane · · Score: 5, Funny

    DUDE! You bought Dell!

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