Dell In Talks To Go Private?

The decision for Dell to go private seems like a smart idea. Coming up with the money to make a move like this is going to be the hard part.

The company is discussing going private with at least two firms, said one of the people, who declined to be identified because the talks are private. The discussions are preliminary and could fall apart because the firms may not be able to line up the needed financing or resolve how to exit the investment in the future, the people said.

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I don't see this being nothing more than a short term opportunity to selloff some
stock.

It was up almost 15%. Thats a nice payday for rumors.

Hard to impress investors with a questionable PC landscape & having to stay on top of the whole mobile scene.

Sounds like a good move for them.

I predict this will be the next phase of Capitalism... Sell your company for big bucks... (and loose control over it)

Then if your still big enough, and making enough money, buy it back, regaining control, and being able to do anything you want without those pesky shareholders telling you what to do.

I never understood why a company went public in the first place, it can only be greed over common sense.

If they do go private I do think it is all about Michael Dell cashing out, not saving the company and the employees ... I think Dell could salvage themselves (even as a public company) if they want to ... there might be a little less pressure for them as a private company but they could carve out a successful niche either way ... I hope they get their act together because I think Dell is a decent company

Of course, in the spirit of full disclosure I do buy Dell products ... my employer buys Dell products ... and my employer manufacturers Dell products

Stimpy88 said:

I predict this will be the next phase of Capitalism... Sell your company for big bucks... (and loose control over it)

Then if your still big enough, and making enough money, buy it back, regaining control, and being able to do anything you want without those pesky shareholders telling you what to do.

I never understood why a company went public in the first place, it can only be greed over common sense.

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at one point it was to gain long term capital for the company
now its just about the IPO pay out

colinstu said:

Hard to impress investors with a questionable PC landscape & having to stay on top of the whole mobile scene.

Sounds like a good move for them.

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Think the business market and server side not desktop users and certainly not mobile.

Wait Dell is hurting as a profitable company?

Let me guess, China.

Well, with their craptastic pricing on "upgrades", I would not be suprised if they are having trouble.

If I buy RAM and an SSD seperately for a Dell machine, I save an average of $350 per machine.

Some machines, I can save around $700 or so buy only buying RAM and SSD seperately.

And this it with a corporate account in which we get a pretty big "discount" over regular pricing from Dell.

Stimpy88 said:

I predict this will be the next phase of Capitalism... Sell your company for big bucks... (and loose control over it)

Then if your still big enough, and making enough money, buy it back, regaining control, and being able to do anything you want without those pesky shareholders telling you what to do.

I never understood why a company went public in the first place, it can only be greed over common sense.

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The system was originally setup to help solve a logistics problem. Once a company gets to a certain size, it becomes almost impossible to gain enough capital to rebuild or retool the infrastructure to start producing nationally, and then again for international production. To solve this, they 'borrow' money from investors. To give investors an incentive you have to give them something back. Also note that going public does not mean giving up any control of the company. You can still maintain full control of the company and go public. Another reason for going public is that now you own a massive entity, and with that comes some rather exponential liability. The entity that you have created has really become something on its own, and no one person or small group should be personally responsible for it. Now, unfortunately many executives are abusing the way they set up their public companies and find ways to take a lot of cash out of of the company before it really becomes liable like Enron and others. But that is where some regulation or rather some restructuring of commerce laws would be most beneficial.

Now the problem with going public is that there can be a lot of fluctuation in the market. That fluctuation has the potential to hurt you more than help you at times. So now with the market being so volatile and likely to have another big setback with all of the crapola going on with the WH and congress, companies are looking for ways to secure their future. Companies that are large enough to handle their own infrastructure may try to buy back into the private domain. Thus they are essentially taking themselves out of the risky ocean and settling back into a calm bay. They may not get the huge waves of cash, but they also are as susceptible to the huge crash.

Companies like Facebook are a little different. Even though it is a software and IP company, they still need a large infrastructure to maintain their product online and to continue development, especially in overseas markets. Also, they aren't really monetizing their product, so they need cash in some form to really boost their overseas presence and continue development for the large monstrosity they now have. So what on the outside may look like greed, is still a necessity for their growth. Now, the over inflation of their IPO is complete greed. But that is not exactly Mark Zuckerbergs fault. The investment industry help set that price, and what business man is not going to try to cash in on that? Plus, even though it was over inflated, these initial IPO offerings are still just 'best guesses'. And things like Facebook are still relatively new entities as they don't really offer a tangible or saleable product.

In any case, there are very definite needs for the investment market and going 'public'.

NoOther said:

The system was originally setup to help solve a logistics problem. Once a company gets to a certain size, it becomes almost impossible to gain enough capital to rebuild or retool the infrastructure to start producing nationally, and then again for international production. To solve this, they 'borrow' money from investors. To give investors an incentive you have to give them something back. Also note that going public does not mean giving up any control of the company. You can still maintain full control of the company and go public. Another reason for going public is that now you own a massive entity, and with that comes some rather exponential liability. The entity that you have created has really become something on its own, and no one person or small group should be personally responsible for it. Now, unfortunately many executives are abusing the way they set up their public companies and find ways to take a lot of cash out of of the company before it really becomes liable like Enron and others. But that is where some regulation or rather some restructuring of commerce laws would be most beneficial.

Now the problem with going public is that there can be a lot of fluctuation in the market. That fluctuation has the potential to hurt you more than help you at times. So now with the market being so volatile and likely to have another big setback with all of the crapola going on with the WH and congress, companies are looking for ways to secure their future. Companies that are large enough to handle their own infrastructure may try to buy back into the private domain. Thus they are essentially taking themselves out of the risky ocean and settling back into a calm bay. They may not get the huge waves of cash, but they also are as susceptible to the huge crash.

Companies like Facebook are a little different. Even though it is a software and IP company, they still need a large infrastructure to maintain their product online and to continue development, especially in overseas markets. Also, they aren't really monetizing their product, so they need cash in some form to really boost their overseas presence and continue development for the large monstrosity they now have. So what on the outside may look like greed, is still a necessity for their growth. Now, the over inflation of their IPO is complete greed. But that is not exactly Mark Zuckerbergs fault. The investment industry help set that price, and what business man is not going to try to cash in on that? Plus, even though it was over inflated, these initial IPO offerings are still just 'best guesses'. And things like Facebook are still relatively new entities as they don't really offer a tangible or saleable product.

In any case, there are very definite needs for the investment market and going 'public'.

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Something that is predicated on continued growth and hasn't really made money yet with the exception that founders / early investors get money from other investors, is call a pyramid scheme.

And the public model is horrible broken. People end up running companies and making major decisions that have zero background in those businesses. Or, almost as bad, you have absentee leadership and the exective staff runs the ship into the ground. Putting things back under one person or small groups would be a step in the right direction.

cyclone3d said:

Well, with their craptastic pricing on "upgrades", I would not be suprised if they are having trouble.

If I buy RAM and an SSD seperately for a Dell machine, I save an average of $350 per machine.

Some machines, I can save around $700 or so buy only buying RAM and SSD seperately.

And this it with a corporate account in which we get a pretty big "discount" over regular pricing from Dell.

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It's the same story with all computer manufacturers out there. Lazy ignorant users pay more. Some consider it better to pay more and get all parts from same vendor for the sake of easier tech support and replacements. Not like they force you to buy these parts, just get cheapest ones and buy your own to save money.

cyclone3d said:

Well, with their craptastic pricing on "upgrades", I would not be suprised if they are having trouble.

If I buy RAM and an SSD seperately for a Dell machine, I save an average of $350 per machine.

Some machines, I can save around $700 or so buy only buying RAM and SSD seperately.

And this it with a corporate account in which we get a pretty big "discount" over regular pricing from Dell.

Click to expand...

You're right but it's upsetting to see people still considering Dell as a straight manufacturer of consumer computers. Dell is much heavier in the DATA CENTER space these days. Selling computers is a tiny part of their business at this point with all their investments in acquisitions of enterprise hardware solutions. I see Dell acquiring a new company like once a month.

Keep in mind a publicly traded company has MANY more regulations they have to follow, which incur a significant overhead cost (audting, sarbox, etc).

jpm100 said:

Something that is predicated on continued growth and hasn't really made money yet with the exception that founders / early investors get money from other investors, is call a pyramid scheme.

And the public model is horrible broken. People end up running companies and making major decisions that have zero background in those businesses. Or, almost as bad, you have absentee leadership and the exective staff runs the ship into the ground. Putting things back under one person or small groups would be a step in the right direction.

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No, and that is the exact thing that makes a lot of this so retarded. People seem to cry "Pyramid Scheme" too often. Where is the pyramid in this model? You are completely off base here. This is more akin to crowd funding than pyramid scheme. You aren't buying stocks from someone, who then buys from you, who then buys from them and the first person is making some residual money off of that. What you have is a company that is selling stocks, which provide you either voting rights or dividends. Brokers make money by providing an easy service between you and the company where you can make these purchases. It is simply part of the infrastructure. There is no "Pyramid" or "scheme" here in the sense you are implying.

Also, the public model also is not horribly broken. There are thousands of public companies out there that are using it exactly as it is intended. The mistake you are making here is assuming that a few public companies in the limelight do things that we cannot comprehend. But that doesn't mean they are always wrong. There are many companies that make risky decisions about who runs the companies and many of those end up getting a big reward.

The people you hire to run a company have various skills. The skills your company needs may have nothing to do with what the company currently does, especially with humongous companies. People make the mistake of thinking that a company like HP or Dell needs a CEO who knows how to manufacture and sell computers. However, that is not what they need, they already do that fairly well. What they need is someone that has a different set of skills and can bring in new business and new opportunities. The problem is when the new CEO ends up botching the things the company used to do well, and makes bad decisions about what direction to take the company. But the previous one did the same thing, or they wouldn't need a new CEO.

People too often think they know how a company should run and then project that onto the failings of the company. But really, none of us really knows what is really going on in the heart of the company behind some of these decisions. There are lots of factors that end up making or breaking certain decisions, many of them unforeseen. And there are some decision we think are horrid because we don't see the long term goal. A popular one in contracting is companies that take on failing companies with bad government contracts. But what people don't realize is the point is not to make money from that companies current contracts, but to get the contacts and foot in the door to that area of contracts and make new deals. The same goes on in the corporate world.

Many times people see mergers or buyouts as failures for companies, and in some cases this is true. However, often times it may not just be about eliminating competition or obtaining patents, it may be about gaining contacts those companies had in manufacturing or in other countries. There are a lot of logistics involved that is a big swarmy mess of red tape and beauracracy. Often it is easier to buy a company that already has done all the paperwork and has contacts rather than trying to go in cold.

Why do I mention this? These are all extra little tidbits on why companies end up needing large amounts of cash to make the next leap. There is a huge amount of initial investment needed to bridge markets from one area to another. The investment may be in more manufacturing, higher volume processing, expansion in foreign markets, mergers/buyouts/takeovers, compliance with new regulations, etc. So in summary, it is not a "Pyramid Scheme" or some kind of hoax, nor a "horribly broken" model. It is a necessity where many follow the rules, yet some find ways to 'game' the system. Just like just about any other area of business or life.