Dell is going private—for realsies this time

It’s finally, really happening this time: Dell is going private. Late yesterday, the company announced that, based on a preliminary vote tally, its stockholders have approved a $24.9-billion deal that will see founder Michael Dell and investment firm Silver Lake Partners take joint ownership of the company.

Here are the details, for those interested:

In connection with the transaction, Dell 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 a date prior to the effective time of the merger, for total consideration of $13.88 per share in cash. The agreement also guarantees the regular quarterly dividend of $0.08 per share for the fiscal third quarter would be paid to holders of record as of a date prior to closing.

Dell expects the transaction to close by the end of the third quarter of its 2014 fiscal year—by early November, in other words. (The company’s Q2FY14 ended on August 2, 2013.)

The original plan was for Dell to go private by the end of the second fiscal quarter. However, as the Wall Street Journal reports, the deal was repeatedly postponed because of pressure from "major Dell stockholders," including billionaire investor Carl Icahn. The WSJ says Icahn finally relented after Dell agreed to pay stockholders more per share. The original offer, announced in February, was $13.65 per share, so it looks like the price was kicked up a dime or so.

In an open letter to customers, Michael Dell says his company will now go "back to its roots" and revive the "entrepreneurial spirit that made Dell one of the fastest growing, most successful companies in history." He adds, "As a private company, we can move even faster toward our goal of becoming the industry’s leading provider of scalable, end-to-end solutions that deliver extraordinary value for you and your organizations."

Well, if there’s one thing that excites me as a consumer, it’s scalable end-to-end solutions. That, and intentionally vague corporate jargon. Mmm-mm-mm.

Comments closed
    • Diplomacy42
    • 9 years ago

    Apple hasn’t innovated a thing since the iPhone 2. They seem to be doing ok.

    • oldog
    • 9 years ago

    Innovation is NOT an overrated buzzword in the tech industry.

    It is the only word in tech; you either make innovation yourself (Apple/Google) or buy it from someone else (Yahoo).

    Mattresses on the other hand are a completely different matter… unless of course what you mean to say is that what Dell makes is now like selling mattresses. Actually, I’m not sure I would argue that point.

    • aceuk
    • 9 years ago

    Imagine if your next PC was made by Huawei!

    • ronch
    • 9 years ago

    [quote<]innovation is an overrated buzzword.[/quote<] So true. Few people are ever looking for something totally new and novel. Most folks are just looking for good deals, and by good deals I mean getting something not just at a low price, but a product that seems worth more than the asking price for it. And on the contrary, many 'innovative' products fall flat on their faces. Just look at those fancy 'convertible' form factors, Windows 8 (which looks pretty innovative), the Bulldozer architecture (which has to be the most unique CPU core ever designed), etc.

    • Diplomacy42
    • 9 years ago

    everybody is pagan. for realsies.

    • Diplomacy42
    • 9 years ago

    dell became big offering good quality products, a good warranty and a good price. if they can just wander back to that model, they can be big again.

    innovation is an overrated buzzword.

    • oldog
    • 9 years ago

    I wonder how much Dell can spend for R&D? This is no longer a public entity where he can float stock for operating capital.

    I very much doubt Dell can come anywhere close to innovating the way Apple did.

    • ronch
    • 9 years ago

    Maybe he’s a big Steve Jobs fan. Maybe he wants to transform Dell into an Apple? That would be cool.

    • ronch
    • 9 years ago

    [quote<]for realsies[/quote<] Talk like that within the Thief game series and people would think you're a pagan.

    • oldog
    • 9 years ago

    I think being a services company is a tough row to hoe.

    If I were to offer advice I would say that they need to be much better at offering integrated solutions for smaller businesses. Offer desktop, tablet, phone, and server hardware with pre-loaded software specifically targeted at an industry i.e. medical, dental, legal etc. Make a (transactional) profit on others hardware and software as well as your own. Make it easy to manage with minimal IT support which Dell provides on a hourly basis remotely.

    They should move down the food chain and not target large businesses. They can be very successful and no longer have to compete with IBM or HP.

    • davidbowser
    • 9 years ago

    Disclaimer: I work for VMware, but my opinions are my own.

    The responsibility of the CEO (and all management) of a publicly traded company is to increase shareholder value. The problem is when the shareholder wants short term value at the cost of long term value. Notice what happened to IBM when they sold their PC business to Lenovo. It took shareholders 2.5 years to get back to the same stock price. That was a “long term” change in direction that hurt shareholders in the short term, but a MASSIVE long term gain. Dell is trying to execute a change like that without the short term financial damage.

    Some folks don’t see why Dell is doing this, so I will point out some stuff Dell has done in recent years that have led to this. Dell is losing to almost EVERYONE (5th place) in converged infrastructure market share. Dell lost 3Par to HP. Dell lost Dynamic Ops to VMware. Dell bought Quest when it was on the decline. Dell has also bought some good companies like WYSE (desktop virtualization and point of sale) and Enstratius (cloud consulting services) and small and medium players like SonicWall (security and firewalls)

    Dell is trying to play catch-up, and the momentum is NOT good.

    • Game_boy
    • 9 years ago

    Become IBM. Do software and services. Minimise or ditch the PC OEM business.

    • BloodSoul
    • 9 years ago

    Doing what everyone else is doing isn’t necessarily “innovative”…

    • superjawes
    • 9 years ago

    I think an easy way to innovate would be to get out a phone or a tablet…but it has to be good enough (and affordable enough) to compete with everything else out there, which means they can’t skimp on the engineering.

    That might not be exactly what they try to do, but I think taking the time to do things right is what will make or break Dell at this point.

    • oldog
    • 9 years ago

    Just one question. How does Michael Dell plan to innovate?

    Without any plan for real innovation this is a dead company.

    Interestingly, I think MD can ride the train longer before it crashes as a private company. Maybe that what he’s thinking too.

    • Stickmansam
    • 9 years ago

    AMD would lose all the original x86 licenses though it could try and counter by holding the x86-64 licenses that they gave Intel hostage

    • derFunkenstein
    • 9 years ago

    I regret that I have but one +1 to give to this comment.

    • Vrock
    • 9 years ago

    True, but they’re getting a dividend before that happens.

    • destroy.all.monsters
    • 9 years ago

    Probably forever like the deal VIA has. The only reason they allowed GloFo to separate was due to the likelihood of AMD winning on the merits of its cases. Not all of the agreement was made public from what I recall.

    • MadManOriginal
    • 9 years ago

    What if…?

    They would just fail twice as hard.

    • A_Pickle
    • 9 years ago

    How long is that good for?

    • A_Pickle
    • 9 years ago

    What a horrible, horrible thing to do!

    • destroy.all.monsters
    • 9 years ago

    I’d prefer a filet of sole to something filled with sole.

    • destroy.all.monsters
    • 9 years ago

    You either benefit from Wall Street’s skewed perspective or you don’t. If you don’t – and you want to keep your company alive – taking it private makes a lot of sense. Valuations aren’t really based on anything. You might ask Ballmer, Balsillie and Scott Nealy about that “insulation”.

    Your Amazon citation bolsters, not undermines, my point. If the stock market is about anything – it’s about having someone at the head of the company with a magnetic personality. Sex appeal, if you will.

    The press said Apple was dying for something along the lines of 20 years. The only danger of the press is when their influence on the public is greater than the RDF of the CEO. There is an overlap between the press and the stock market as well (see various trade papers for example).

    • A_Pickle
    • 9 years ago

    It does, though. You say that “people in tech and on Wall Street” viewed him as a joke, but… that’s not true, at least not universally. And it didn’t need to be held universally true — the only people who needed to NOT view him as a joke were Apple’s voting shareholders, and they obviously didn’t see him as a joke. And why not? The man pioneered the personal computing industry, and it took him all of one or two years to produce the iPod, and his mythical status was re-established. Shareholders had evidence of success, and continued to trust him.

    Dell has never had that aura. They capitalized on the PC market that Jobs proved existed, they didn’t invent it, they just supplied it. It’s not glamorous, and I suspect Dell WANTS his company to be glamorous. I actually think Dell makes some pretty decent products, but GOD they could do so much better. HP could, too, but instead of a nice, top-to-bottom smartphone-PC-home server consumer ecosystem, we got visionaries who saw WebOS’s future on [i<]printers[/i<].

    • A_Pickle
    • 9 years ago

    eh! eh! eh!

    I laughed.

    • BaronMatrix
    • 9 years ago

    Well, the shareholders did sue them once…

    • DLHM
    • 9 years ago

    wrong post.

    • Decelerate
    • 9 years ago

    For every model? I assume they change the inputs/bezel though, no? Because Samsung stands suck compared to Dells’ imo.

    I miss the Crow Foot.

    • ssidbroadcast
    • 9 years ago

    Don’t ask him for whom the bell tolls.

    • StainlessSteelMan
    • 9 years ago

    Michael Dell tells us well: “Sell or hell”. In a nut-shell.

    • Shambles
    • 9 years ago

    Hopefully their laptops will no longer be designed to cut the BoM down by every penny possible. It would be nice to see some full voltage windows laptops that are designed around what consumers should want, not what share holders want.

    • Voldenuit
    • 9 years ago

    [quote<]Am I the only one who gets tired of the machinations of sole-less entities?[/quote<] 'Dem crazy shoe-less hippies! /shakes fist

    • My Johnson
    • 9 years ago

    Blah, blah, blah, this is an accounting trick to reduce Dell Corporation’s tax burden.

    • indeego
    • 9 years ago

    They rebadge LG/Samsung.

    • asdzxc57
    • 9 years ago

    I think Mike should go back to selling computers from his car to get his entrepreneurial spirit back.

    • blastdoor
    • 9 years ago

    I don’t agree at all about the difficulty of dealing with the bs of the stock market.

    Yes, there is a lot of bs in the stock market. But so what? I think the idea that a CEO has to pay attention to that bs is itself bs. CEOs, and corporate boards of directors, are notoriously well insulated from stockholder pressure. Wall Street types might not like what a management team is doing, and might issue downgrades etc, but there’s precious little they can actually do about it in any substantive way. Especially in a situation like Dell where the founder is the CEO and nobody else really seems to have any better ideas about what the company should be doing. Wall Street might whine, but Dell’s job was not at risk if he did something that sacrificed short term profits for long term profits.

    Heck, look at Amazon — that’s a publicly traded company that makes virtually no profit and the CEO just winks and says “trust me — someday there will be big profits” and Wall Street loves it.

    I’d say the bigger threat to most companies is the BS in the press, not the BS from wall street, because what the press says about a company could actually affect customer perceptions of it. But there’s no way of doing away with the press…. at least not yet.

    • blastdoor
    • 9 years ago

    I agree 100%. This has nothing to do with it being easier to implement his a turnaround strategy as a private company, and everything to do with it being easier to keep all the profits for himself. This is a classic Railroad Tycoon situation.

    Just look at Apple in the 1990s. The problem with Apple was not that it was a publicly traded company, it was that its management sucked. When SJ came back he didn’t take the company private, and it would seem that his turnaround strategy ultimately worked out ok. And, btw, Apple was in significantly more dire straits than Dell, with a much riskier (and opaque to shareholders) turnaround strategy. Oh, and back in 1997 SJ was not viewed as the mythical being he is today — many people in tech and on Wall Street viewed him as a joke. So its not like Apple’s case doesn’t apply due to the mythical status of SJ.

    • bentbent
    • 9 years ago

    It is very hard to point to developments and products that did not happen, was killed in product development or simply was not thought of because of the ideas of management.

    • superjawes
    • 9 years ago

    If you want a sole-filled company, you need to look at Nike, Skechers, Red Wing…

    • superjawes
    • 9 years ago

    [quote<]Investors fuel themselves up with crap news from big investing news sources where they speak of nothing but doom and gloom in the PC industry, even though it's doing relatively fine.[/quote<] I partially agree with this. I think the Newegg/Microcenter types are fine, but the Dell/HP ones have an uphill struggle. If you want a gaming desktop, you're best building your own. If you want something portable, tablets and smartphones are becoming more appealing than laptops. That really eats into Dell's potential market with many of their current products. My guess is that Dell already has a plan, and we'll see new and/or improved products in a year or two. As for public vs. private, I think MS, HP, AMD, and Dell all benefitted from public trading while the PC was booming, and years of growth meant they could raise whatever capital they wanted. Now that computer hardware is changing (mostly in the form of mobile tech), I think all of these names need some time to change course, and they're getting lots of public criticism because they aren't seeing the same growth they did 10-15 years ago.

    • kamikaziechameleon
    • 9 years ago

    When a company exists for no other reason that to exist as is the case with all publicly traded entities you find they are playing a numbers game. A company with an owner has a sole, as he is vested in not only the survival but the growth, popularity/perception, influence… and maybe even creativity of the company.

    Am I the only one who gets tired of the machinations of sole-less entities?

    Love or hate Dell, Jobs, Gates, etc the industry was better when they were in it.

    • kamikaziechameleon
    • 9 years ago

    The law of the masses is that they are led by a strong willed few. What we’ve seen though with technology is that the business overhead is so large that only conglomerates can afford to get into the business profitably. As such there is not driving force for many public companies besides making the numbers make sense.

    I think this acquisition is great news as it means we have one more passionate entrepreneur guiding our industry. W/o these types of people we would be lost.

    • albundy
    • 9 years ago

    wall street messed this up too, huh?

    • TheMonkeyKing
    • 9 years ago

    No, you’re getting your dividend yanked as we will buy your shares back.

    • just brew it!
    • 9 years ago

    There may be a clause in the AMD-Intel x86 cross-licensing agreement which prohibits this.

    • deathBOB
    • 9 years ago

    Turn that around: what if Dell bought AMD?

    They’d be the only PC manufacturer who didn’t have to pay the Intel tax. Sure, they may not be competitive on the performance front, but they could seriously undercut competitors.

    • iq100
    • 9 years ago

    You wrote>”… Michael Dell says his company will now go “back to its roots” and revive the “entrepreneurial spirit that made Dell one of the fastest growing, most successful companies in history.” …”

    Can anyone list the specifics, in terms of names, function, description of ANY Dell technical effort that has been hampered by being a publicly traded company? Absent any technical specific issues, I am going to assume this is politics. Is it about power and money for Mr. Dell, and his friends and NOT about lifting any professed barriers to ‘technical intelligence’.

    • destroy.all.monsters
    • 9 years ago

    I don’t think we’re going to see a huge difference in what Dell does. Taking the company private means that it doesn’t have to deal with the b.s. in the market and its overly short term way of thinking and overt favoritism.

    I’d like to see more tech companies do this (AMD should have before divorcing from GloFo).

    • HisDivineOrder
    • 9 years ago

    I think it’s symmetry. Michael Dell started it all and he’ll end it all.

    • HisDivineOrder
    • 9 years ago

    As I recall, MS had a not insignificant part of the original Dell deal in taking it private. I imagine this is a boon for MS to keep Dell “on point” with MS OS’s.

    In the end, I think it matters little. Dell is toast. Stick a fork in them, they’re done.

    • bfar
    • 9 years ago

    They do indeed make some decent monitors.

    • Decelerate
    • 9 years ago

    Not everyone can pull a [i<]Steve Jobs[/i<]. See: Jerry Yang

    • colinstu12
    • 9 years ago

    Hell no.

    Last thing Intel needs to do is become a PC manufacturer. They need to SELL their chips to make money. Not PCs where there’s so much cost and so little return.

    They can get away with the NUC because there’s so little to it and isn’t a big seller.

    Please Intel, concentrate on making better architectures and shrinking until you can’t shrink anymore.

    In the end, I think Dell going private is a great idea. Investors fuel themselves up with crap news from big investing news sources where they speak of nothing but doom and gloom in the PC industry, even though it’s doing relatively fine. So what there’s some tablet pressure now, Dell would do great if their stock wasn’t tanking and could actually put the worry on making better computers and not on the stock market / money situation / pleasing board members.

    I don’t know why some other big tech players don’t go private. MS? HP? AMD? have any of them actually benefited from being public?

    • Vrock
    • 9 years ago

    Dude, you’re getting a dividend.

    • trackerben
    • 9 years ago

    He’ll focus Dell on the Enterprise market and probably plans to hive off the consumer PC business. Or eventually sell it to some Chinese or Japanese brand.

    • sunner
    • 9 years ago

    Michael Dell founded this company.
    I think he’ll do quite well.
    Go to it Michael.

    • Decelerate
    • 9 years ago

    I respect the man for at least doing half of what he preached: he returned the money to the -[i<]public[/i<]- shareholders. Now if he wants to shut it down, I'd like to have an early notice to stack up on some monitors...

    • jimbo75
    • 9 years ago

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