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Now That It's Private, Dell Targets High-End PCs, Tablets
jfruh writes: If Dell has a reputation in the PC market, it's as the company that got low-end PCs to customers cheaply. But after the great drama of founder Michael Dell taking the company private, the company is following a new path, adding higher-quality (and more expensive) products like the Venue 8 7000, the thinnest tablet on the market today, to its lineup. One analyst notes that "Because they are no longer reporting to Wall Street, they can be more competitive."
They can focus on long term rather than short term profits.
Its really more in the greater ability to take risks and make quick decisions.
Share holders want maximum short term profits. This often conflicts with the overall health of the company.
Shareholders are shortsighted. Everything is quarter to quarter these days. Google has shareholders, but Page and Brin own the majority of the shares so they have control, and when shareholders give them shit every year for spending so much money and resources on failed side ventures and pie in the sky stuff like self-driving cars, they tell the other shareholders to get bent, because they can't be raided by people like Carl Icahn and have their company taken from them because they're not giving a higher dividend or because their R&D budget is absurd.
Wellllll... kind of. When you're publicly traded, it's all about risk and paring down excesses. Shareholders don't want you to take risks. They want you play it safe so their share values don't go down. They want to see that you've cut operating expenses by X in every report. This limits your ability to try new things or market to those niches.
When you're private, you can take as big of a risk as your cash reserves permit.
Statements like these are mindboggling.... "Because they are no longer reporting to Wall Street, they can be more competitive." Your share holders want you to maximize profits and growth, this rarely results in wanting you to be less competitive...
Only if you treat market rationality as axiomatic, rather than as something that requires empirical demonstration...
It is not beyond the realm of possibility; but it is hardly self evident.
One analyst notes that "Because they are no longer reporting to Wall Street, they can be more competitive."
The problem isn't Wall Street. Its the board members. And lots of companies thrive just fine as public companies because the board is taking the long view, selects a CEO with vision, and then lets him pursue it.
While you have a toxic board that is only looking to milk the company, selects weak CEOs, and structures management compensation to incent short-term thinking then you've got a problem.
I guess taking it private is one way to get rid of a toxic board, and good for Dell if they can reinvent themselves this way. But the problem isn't faceless "wall street".
Instead, name and shame the Dell board members. They were the ones enforcing the short term outlook.
I think they mean competitive at producing the highest quality devices. Trying to turn the maximum profit does not typically result in the highest end devices, but rather the most profitable ones, which are typically mid-range products with last year's components.
In 2009, Dell caught headlines with its premium Adamo slim laptop, which was considered a competitor to the MacBook Air at the time.
Yes. "at the time." And remember the Dell competitor to the iPod? There are several problems for Dell here. 1) They are a maker of commodity hardware trying to move upmarket. But the fewer units they sell, the worse their economies of scale, so how to really make something special, without having to charge too much? Apple doesn't have that problem, in part because they sell 6-8 figures of even their high-end products. 2) Sure, Slashdot readers may be an exception, but most people who want Android and Windows machines rarely want expensive ones. So most of their target market will either want a cheaper Android tablet, or, if they want to spend more, they'll get an iPad.
I think the best Dell can hope for is to be a niche player, a slightly bigger version of their subsidiary Alienware. 15 years ago, Dell and Microsoft both seemed unstoppable, but both have repeatedly stumbled since then. My, how the mighty have fallen.
Q: What does the "B." in Benoit B. Mandelbrot stand for? A: Benoit B. Mandelbrot
Understood.
Yet, for example, Apple is competitive. But Dell is not? The same major 'shareholders' mutual funds, etfs etc hold both companies. I agree that the shareholders elect boards, but each board has a unique momentum and culture despite all being more or less elected by the same people.
Please let this mean the next developer edition XPS is going to be amazing. The current generation is pretty good already but where is my high dpi screen? I hope they are aiming at Apple's turf and I wish them luck.
In April Google also did a stock split, and started offering Class-C shares that trade under "GOOGL", they have 0 voting rights. Granted you can still purchase class-A shares, as before...but even before this stock split there were still two classes of shares: :: available to the public, and
Class-B :: - primarily held by Larry Page, Sergey Brin, and Eric Schmidt.
Class-A
Class-B shares have 10 times the voting rights of Class-A, and gives the Class-B holders 61%+ of the voting rights.
Stupid investors? I just don't understand why people invest in companies that have been taken private by a hedge fund, loaded up with debt and then IPOed. The story is all too common -- the company takes on massive debt, pays a huge dividend to its hedge-fund owners then sells itself on the stock markets. But why buy? It's not going to be a viable company with all that debt.
The real "Libtards" are the Libertarians!
You're right, because no computer company has ever turned itself around from almost going bankrupt to being the most valuable company in the US while still remaining public....
Apple is somewhat special. See, for example:
Institutional ownership of Apple shares has declined as funds question the company’s ability to increase revenue long term, Morgan Stanley said in a report this week. Apple’s 30 largest shareholders own a record low 30 percent of shares outstanding, down from a peak of 40 percent in 2009, according to the report.
They can focus on long term rather than short term profits.
Wall Street is willing to invest for the long term as long as you have a credible long term strategy. Amazon is a good example. They plow almost everything they earn back into the company, generating very little profit in the short run. The dot com frenzy of the 1990s was an example of long term investing that didn't work out.
Dell thinks they can be Apple, but don't have the walled garden that makes it work.
So put your name to your comment, AC. My experience with Dell has been less than 2% failure over 1000's of Optiplex, Latitude and Vostro units. The main cause of warranty claim has been DIMM at > 80%, PSU at ~18%, MB at ~2%.
A lot of folks whinge about Dell, I suspect that's because these folks would rather roll their own PC. That's fine, until you have to roll 1000 in a week.
Statements like these are mindboggling.... "Because they are no longer reporting to Wall Street, they can be more competitive." Your share holders want you to maximize profits and growth, this rarely results in wanting you to be less competitive...
Short term only, by and large. Small recently listed symbols excepting. Dell is making a gamble on something that used to be a staple in computers, and still is in autos. Develop for the high end, trickle down to the low end.
I really hope it works out for him. Maybe someday "Dude, you're getting a dell!" won't be an insult hurled from one teenager to another.
They can focus on long term rather than short term profits.
Wall Street is willing to invest for the long term as long as you have a credible long term strategy. Amazon is a good example. They plow almost everything they earn back into the company, generating very little profit in the short run. The dot com frenzy of the 1990s was an example of long term investing that didn't work out.
No, they really aren't.
In the 1990s, everything thought Amazon was crazy. People invested in it because they knew 2 things:
1. Bezos was blunt about the fact that it would be a LONG term investment.
2. People signed up during the dot com bubble. If you were smart/crazy enough to sign on then, you were smart/crazy enough to stay in (at least as far as the LONG term plan went)
They were mad at Dell because Dell wasn't in Apple's market. Apple was exploding with growth, whereas Dell "only" had a stable market that they did well in. They didn't like all the server sales because that wasn't a growth market with huge margins.
With high end boutique computers would be a similar issue. While margins might be good, volume would be low and would never go up. It will always be a specialty market. Hence not something investors want money being "wasted" on. Doesn't matter there's money to be made, it isn't enough money fast enough with the promise of infinite growth.
Well, sounds like the private investors that own Dell now are a bit more sensible. They realize that there's something to be said for making money in smaller markets.
Nah, every statement made here on /. is an absolute to the reading comprehension challenged.
Except this one actually is I suppose, since I said "every".
Personally the whole concept of shareholders is starting to rub me the wrong way. Large public corporations all too often begin to focus far more on shareholder profits at the expense of their customers and employees. I believe it should be as much about making good product as it is good profit. And certainly treat employees with some respect too, because without them, or customers, there is no company, no matter how many shareholders you have.
Look back up at my post, now look back down, you're on the Internet. Now look back up. I'm a signature.
I'd be willing to pay for a high quality PC or tablet that wasn't made in China by the lowest bidder. I'm frankly sick and tired of poor quality Chinese crap! I once suggested to the CEO of my company (named after two people) to do the same (ignored of course).. To make it in the Yoo Ess but it'd damned better be good quality. I'd pay the premium. Sort of like the "Harley Davidson" of computers with out the T-shirts. I am so tired of supporting CEOs that bet bonuses based on short term quarterly report results at the expense of the long term health of the company. I'd also like too support a company that is truly innovative vs. one that can't even design a product and instead, outsources the crappy design and manufacture. Give me a premium product and I'll pay a premium price. I realize not everyone wants this but dammit! Give us a choice!
because without them, or customers, there is no company, no matter how many shareholders you have
Very true. But you can't have any employees or customers without shareholders - even if that is one person to start - because somebody needs to make the big gamble and invest the money to get a company started, then continue investing through multiple growth stages to the point where you could even go public.
One interesting point that many Slashdotters overlook is that post-IPO, "shareholders" don't exist for the benefit of the company per se - the buying and selling of a company's shares post-IPO puts no new money in the company's pocket (although share price does help with things like credit ratings, cost of capital, etc.). Having zillions of public shareholders is actually mostly to the benefit of the people who are or were part of the company and as a result were granted shares, be they founders, investors or employees. Without a liquid market for shares, they essentially are worth nothing (just ask someone like me who had a shitload of shares in a pre-IPO startup that were ultimately worth "1 shitload x 0 = 0") if you can't convert them to cash when you want to. Once your company is publicly traded, everyone who was granted shares in the company can either convert their "sweat equity" into actual cash, or see their investment rise or fall with the performance of the company as a whole.
It's no excuse for short-sighted profits-chasing on the part of some companies' executives, but overall being publicly traded has a lot of advantages for the people who actually worked to make the company successful (again, as long as they made sure to get an equity cut, however small).
"95% of all Slashdot
Shareholders are very happy with risk, as long as the potential profits justify the risk. Nobody would invest in junk bonds if they didn't pay better rates, nobody would invest in Amazon if there wasn't the possibility that it will one day become the largest company in the world...
Amazon is an excellent counter-example. It's a publicly traded stock with ambitious plans that has made money in just one of the previous eight quarters, and yet the stock market values the company at $150 Billion, because they see the value of its long-term plans over the value of short-term profits. Even when it has bizarre public plans like drone delivery or entering the cell phone business or a huge network of redundant warehouses.
Slashdot: providing anti-social weirdos a soapbox, since 1997.
Having worked for 15 years in publicly traded companies, I cannot tell you how tired I am of the drumbeat of making our quarterly earnings. I have seen a very consistent and substantial focus on short-term profit to the detriment of long-term growth.
Wait so when Dell went private they had to fire all the employees?
That is what you just said. IPO's are a one time cash trick. Companies don't make any more money from wall street after wards unless they spilt the stock or release more shares.
Wall street is a net drain on company resources. The only real advantage is that since your books are open banks are more willing to lend you money.
i thought once I was found, but it was only a dream.
You're right, because no computer company has ever turned itself around from almost going bankrupt to being the most valuable company in the US while still remaining public....
Just because someone else managed a very difficult trick doesn't mean that it is repeatable, likely or a good idea. To use a basketball analogy that's like pointing out that someone else managed to sink a basket from the other side of the court and thinking "why doesn't anyone else do that?" You don't bet the company on trying to replicate the long shot improbable success of another company.
The dot com frenzy of the 1990s was an example of long term investing that didn't work out.
No. That was gambling in hopes of striking it rich by getting in early on a company that balloons to 1000x PE in the frenzy. It helped that there were a lot of naive day traders around to supply cash for the big fish to gobble up.
I am becoming gerund, destroyer of verbs.