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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.
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.
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
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!
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.
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.
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