news dell returns to the stock market after six years

Dell returns to the stock market after six years

Computer manufacturer Dell Technologies is back on the New York Stock Exchange this week, almost six years after one of the biggest buybacks in recent memory, putting a value of $34 billion on the company.

While Dell was a huge innovator in the desktop PC space in the early 2000s, it missed the boat as the market shifted away from desktops and grew to include tablets, game consoles, all-in-one systems, and other kinds of PC hardware. Michael Dell, founder and CEO of the company, spent $24 billion to buy the company's shares back in 2013. Dell said in a memo to employees at the time that "Dell's transformation is well under way, but we recognize it will still take more time, investment and patience." Dell was looking for "partners who will provide long-term support to help Dell innovate and accelerate the company's transformation strategy."

Michael Dell; source: Dell

In other words, typical shareholders aren't very patient, since they're bringing money in hopes of seeing their investments grow, rather than waiting for the greater company to do so. This began the process of Dell moving away from being a PC maker and more of a one-stop shop for corporations, offering complete IT solutions in addition to the previous focus on custom-configured PCs, which included a buyout of data-storage company EMC for $67 billion.

Right now, Dell is the third-biggest PC maker behind HP and Lenovo, according to research firm IDC, which puts Dell's market share around 18% and recently surpassed Hewlett Packard as the top server manufacturer.

Dell's reentry into the stock market took a non-typical route. Instead of going the standard IPO (initial public offering), the company bought back shares of VMWare's tracking stock, in which Dell already held an 81% stake. Tracking stocks are meant to separate the "high growth" part of a company from a part undergoing losses (such as during Dell's above transition), allowing the company to retain control of the business function while giving investors the opportunity to put their money into specific areas of the company. The VMWare buyout cost $23.9 billion and Reuters notes that this bypassed a lot of questions investors would've asked about the company's $50 billion pile of debt.

The company's shares are now trading under the DELL symbol on the NYSE, and opened at $46 on Friday morning.

0 responses to “Dell returns to the stock market after six years

  1. Not only that, but it’s become so that if the profits don’t get higher every quarter then something has to be wrong. Never mind that there were profits, they weren’t higher than the previous quarter profits so something has to change…and that’s either prices of the products going up, or quality of the products going down.

  2. I would agree with this. I’ve been buying Optiplex PCs at work for years and I’ve been overall happy with them. I built some custom PCs for us a long time ago and they were kinda mey. Stupid Antec cases didn’t like static. It’s not really worth the time to try to do that myself these days. I haven’t even felt the need to buy the minimum memory configuration and upgrade myself as their memory markup hasn’t been as bad as it used to be. I do generally still buy my own SSDs though and use the crappy 500GB drive it comes with as a secondary data drive. We also have mostly Dell servers but their laptops still don’t impress me. Lenovo Thinkpads have been working great for me there.

  3. I think it’s more: Shareholders paid us a ton of money last time, let’s buy back a diminished company, juke it up with a massive merger and sell it right back to those shareholders a second time.

    I think Michael Dell and his partners bought back Dell just so they could load a few tens of billions of debt onto the company, convince the stock market it included even more than that in “value” and then sell the company again at this new, absurd price.

  4. Very helpful to add examples, and those are great examples.

    Both mission statements strike me as worthy missions, and I don’t think it’s hard to see how there could be an important real world difference between a situation where the mission is maximized conditional on a profit/money constraint instead of the other way around.

    If Intel were maximizing the mission conditional on a profit constraint, their products would be cheaper and they wouldn’t pay a dividend to shareholders. They would make just enough profit to fund R&D, pay competitive wages to employees, and provide some financial cushion as protection during tough times. But of course, Intel is maximizing profit, not mission, and so we see a rather different situation. (I don’t mean to pick on Intel — the same is true of Apple, Google, or any other profit maximizing firm.)

    If BBBS wanted to maximize profit conditional on a mission constraint they’d probably need to charge a fee to have a big brother/sister mentor. Most disadvantaged kids couldn’t afford such a fee, so perhaps they would change into a tutoring service or nanny service for rich kids with behavior problems and/or neglectful parents. Scholarships could be created for poor kids, but the scholarships would need to be funded by some charitable people who aren’t BBBS, because in this scenario BBBS is primarily focused on the $$.

  5. Agreed. Some people live in an idealistic binary world. You made a great post and I hope others, especially in this news post, will make an attempt to understand and see your point of view.

    A not for profit with a primary focus on youth support and empowerment, has a different mission statement than a company like Intel whose primary focus is selling products and services for a maximized profit. I struggle to understand how some fail to make the differentiation.

    A widely known non-profit: Big Brothers Big Sisters of America

    [url<][/url<] Mission statement: Provide children facing adversity with strong and enduring, professionally supported one-to-one relationships that change their lives for the better, forever. Intel's mission statement [url<][/url<] Utilize the power of Moore's Law to bring smart, connected devices to every person on earth. Intel isn't doing that for free and has shareholders demanding maximized profits. Thanks again for the post, bro Happy New year!

  6. [quote<]I don't think I mentioned anything about working for free.[/quote<] That's an important distinction that I think is often not understood. Of course people cannot work for free unless they are independently wealthy. But needing money is a very different thing from seeking to maximize profit. I work for a company that is 100% employee owned and for-profit. But because it's employee owned, profit maximization is not the primary goal. We maximize mission conditional on a profit constraint, not the other way around. That means we turn down profitable work that incompatible with our mission, and we do things that contribute to our mission that aren't profitable. But it doesn't mean we ignore profit altogether.

  7. You don’t need to @ me if you are just going to argue with yourself. You’ve been doing a great job already.

  8. I don’t think I mentioned anything about working for free. That’s not and wasn’t my argument so I’m not going to respond.

    I think you responded to the wrong person.

  9. Indeed. I’m not surprised they exist, I’ve met plenty, but from his past posts I was lead to believe that he may not be a person who you described.

    Thanks for the post, bro.

  10. Where the house always wins and where poor people go to throw their money away while rich people get richer? Sounds about right.

  11. Not to belabor this but Judicial Watch is considered by most to be a very conservative political action group. They are a 501(c) organization. So too are the highly political ACLU and the Southern Poverty Law Center.

    The government definition of a non-profit and mine don’t necessarily align.

    I’m a “Libertarian light”. I really don’t have any problems with legal brothels (as long as they are regularly screened for disease). And yes I believe every organization (including non-profits) need to pay taxes.

    1 Corinthians 10:23
    All things are lawful for me, but all things are not expedient: all things are lawful for me, but all things edify not.

  12. No, the end goal is not always the same. There is a huge difference between companies that only care about making the most profit possible in the current quarter and, after that, “come what may,” and companies that want to make sure that they’ll be profitable for 1000 years, even if they have to sacrifice some of this quarter’s profits.

    That said, all the time that Dell has been private, I’ve been very happy with the quality of the parts we’ve found inside, for the price.

  13. [quote=”watzupken”<]It is difficult if not impossible to maintain a balance between shareholders $ interest vs quality of product. [/quote<] If true, what does that tell you about the stock market? That it's not fit for its original purpose and that it has essentially become a short-term gambling platform?

  14. But it *is* about the money, though. Young dumb idealists may work for free but EDs and program managers do not, nor do their buildings and utilities pay their own bills. Ditto on the marketing and ad teams that the larger ones use, it all has a cost. The [s<]investors[/s<] donors financing all of that are doing it for a combination of tax breaks and emotional satisfaction, both of which can usually be quantified as needed. That's probably where the brothel analogy came from, i.e. exchanging money for a good time. I used to be in the nonprofit business. There's quite a business built up around collecting, managing and distributing all of that money.

  15. they’ve had some decent machines come out since the privatization. Certainly better than prior.

  16. If a company has no plan to make money except shipping garbage products, its not hard to see why shareholders want them to ship lots of that garbage. However no doubt the shareholders will accept a higher-margin plan if a realistic one is on the table.

  17. I disagree that QLC is not a cost savings. It may be *right now* for consumer parts, but I’m already seeing incredible pricing on QLC enterprise stuff that’s very encouraging.

    Write speeds with parallelism are fine for the most part. Consumers read 99.99% of the time.

  18. Yeah — I think this just exposes the BS of that argument in the first place.

    Dell, both the company and the guy, had two main “innovations”:

    1. selling direct over the Internet
    2. negotiating some sweet kickbacks from Intel for not using AMD products

    The shelf life on those innovations was not very long and there was no second act.

    Or… maybe the second act was to spin some silly story about how shareholders forced me to make bad products, buy out the firm, make some non-crappy products (not really innovative, just not crappy), then resell to shareholders, hopefully for a profit. Then go back to making crappy products again.

    The bottom line, though, is that Dell has never been about making money off of good product ideas. It’s always been about making money off of clever marketing ideas.

  19. I can easily imagine that he was being honest, and even if he wasn’t, there are plenty of people who think like that. It’s simply inconceivable to them that anyone could be interested in anything other than profit. Such small minds focused on narrow self-interest really do exist.

  20. Huh? Dell is not a Charity. The end goal is being profitable. No matter how nice and sweat you think a company is, the end goal is the same.

  21. At a guess:

    a) QLC drives are measurably worse than TLC drives whilst offering minimal cost savings. It’s the corporations enabling the race-to-the-bottom behaviour that typically ruins an industry. Manufacturers no longer have to bother competing on performance and value if they can sell Dell/HP/A.N.Other OEM 2 million units at $0.02 less per unit than the vastly superior competition. Albundy is right to shame QLC drives which represent the bottom of the barrel. Controller complexities and additional hardware crutches required to make QLC NAND viable offset the cost savings to the point that we, the consumer, suffer. All that can possibly come from QLC is worse products for the same money.

    b) A gaming rig does not necessarily need no write speed. My Steam library alone would take up maybe 5-10TB if I installed everything, and I’m in the habit of moving games from mechanical storage to SSD, and from one machine where it’s installed to another. Moving 400GB of game library to the laptop is plenty capable of being bottlenecked by QLC NAND, even on pedestrian gigabit ethernet instead of HDD to SSD.

    Don’t support QLC. At present it represents a straight loss for you. In the future, it will represent a quality drop and if enough momentum shifts to QLC production, increased costs and difficulty in finding even TLC drives. It will effectively do what is happening all around the world with distribution of wealth and make the poor products more prevalant whilst driving up costs and exclusivity at the high end.

  22. Interesting. You really think brothels are as virtuous as everything I listed below? You’re either lying or very honest and
    I really don’t think you honestly feel brothels are as virtuous as all the charitable orgs in the examples below.

    According to you brothels are as virtuous as the advancement of education or science?

    You had mentioned before that you had a background in the medical field. Again, interesting considering your recently disclosed stance on education and brothels.

    I respect your honesty if you were actually being honest.

    [url<][/url<] The term charitable is used in its generally accepted legal sense and includes relief of the poor, the distressed, or the underprivileged; advancement of religion; advancement of education or science; erecting or maintaining public buildings, monuments, or works; lessening the burdens of government; lessening neighborhood tensions; eliminating prejudice and discrimination; defending human and civil rights secured by law; and combating community deterioration and juvenile delinquency.

  23. ..private equity can also be a b!tch, note the bit about Icahn and Singer (of Elliot Management):


  24. There are pros to going public, but also costs in doing so. I would expect quality to drop in the near term since shareholders is always going to seek profit. It is difficult if not impossible to maintain a balance between shareholders $ interest vs quality of product.

  25. Damn. They went private and they produced one of the greatest laptops ever, the XPS 13… Amazing product packed with innovation at a very good price.

    and now that they’re public again, I’ll bet the demands cost-cutting and higher profit margins will ensure quality will go down and prices go up, and Dell goes back to making sure its entire lineup is low-budget and low-quality once again.

  26. No, I do not distinguish between a 501(c) or Intel they both need to generate money to fulfill their mission. They operate differently of course because the non-profit is providing a service and the other is making a product.

    All service providing organizations are structured essentially the same way. The income from the non profit comes generally from donations versus an individual paying for a service, and both generate profits which are distributed. Moreover these entities seek to maximize their profits by advertising and marketing.

    A 501(c) can be viewed to be no different than a legal brothel. Both provide services. At least the brothel pays taxes. In my opinion one is not more “virtuous” than the other.

  27. You do distinguish the difference from a 501(c)(3) and a company like Intel, right?

    It’s not about “making money”, it’s the mission of the company and its priorities.

    You kinda missed the point and argued with yourself.

    The herring’s color intensifies.

  28. Now that Intel is expanding and Dell is back on the block, AMD needs to be prepared for the combined assault of illegal business practices from the conspiratorial BFFs.

    Dr. Lisa Su better have a good plan.

    Don’t say I told you so when Dell sells only Intel because of an all too convenient coincidence of Intel over supply.

  29. Hey Al, I know I’m being snarky but who’s not in the business of making money? The Catholic Church? The US Government? Apple? How about you? Do you work for free?

    For your information all businesses are in business to make money. This includes charitable businesses.

    So back to Dell do they make a product that meets your needs? If not buy something from another company in business to make money. I suspect most consumers of PCs are smarter than you think when it comes to a big-ticket item like a new PC.

    OK, snark aside, the key here is that PCs exist in a highly competitive market which is great news for consumers like you and me. There are hundreds of choices and options from RGB extravaganzas to banana pis to well… Dell.

    Rest assured however that when you’re buying anything, somebody is making a profit.

  30. This is the wrong time to get into the market. For the past several Months I’ve been slowly pulling myself out of the market because of the warning signals given through out the year.

    Currently I’m 65% investment property, 30% Cash, 5% mutuals. I’ll stick with that for now.

    I’m already negotiating with my lease holders to freeze their rental rates for 6 months for a longer term lease deal. Because I can firmly see that the sheet is going to hit the fan in 2019.
    My goal is to make a 5% net profit for the 2019 season and this is doable in my case as how I have my business structured.

    The problem here I see with Dell is greed. Pure… Unadulterated… GREED.

    No one is happy with what they have. They want more. Dell is a Tech company I would not put any real money right now because “how” they are getting back into the market. 50 Billion in debt is nothing to sneeze at.

    But most of all I don’t see 2019 to be a happy time for most of us. I think it is going to a harder time to keep what we have as the hidden cost of inflation (I hope you been looking hard at your food bill as an example) is going to be seen.

    I know this as I see the increase lines of people looking so tired getting some food out of a food bank I donate too.

  31. When it comes to Dell consumer PC’s I agree that they offer specs that are pretty useless for the average consumer (massive HD’s, tons of RAM, etc). However, I think their products make a lot of sense as a “one-stop shop for corporations, offering complete IT solutions” — like the article says. The company I work for has approximately 20,000 employees, and Dell’s product is perfect for the office environment. Would I buy one for home use when I can build a personalized rig myself? No way. But that’s not what Dell’s after.

  32. much like all the brands, Dell is not in the business of making PCs. its in the business of making money. they do that by selling crapboxes with extremely low budget parts to unsuspecting unknowledgeable customers. I am willing to bet that they will buy out a majority of QLC m.2 drives and market it in a “gaming” rig.

  33. I was going to say the same thing. Their recent machines are actually quite nice and sturdy.

  34. I’m not sure how much credit to directly assign, but their products sure have come a long way since the 2013 privatization, and it’s certainly not impossible that it’s due to them being able to think of longer term image rather than squeezing every penny for shareholders hunger for perpetual growth.

    Hopefully there isn’t a reversion in going back now that they’re here.

Eric Frederiksen

Latest News

pancakeswap (CAKE)
Blog, Cryptocurrency, Investments, News, Price Prediction

PancakeSwap Price Is Up 33% in 30 Days as February Begins – Here’s Why You Need to Buy Now!

eco crypto
Blog, Cryptocurrency, Investments

The 9 Best New Cryptocurrencies YOU NEED TO BUY in 2023

With hundreds of cryptocurrencies created daily, it can be tough to differentiate the projects that won’t last longer than a few months from those  that will explode in value. Of...

3.1 m memag
blockchain, Blog, Cryptocurrency, Gaming, Innovation, News

Meta Masters Guild (MEMAG) Hits 3.4 Million – Buy Now as Phase 6 Begins!

News about the first mobile-based Web3 gaming guild has spread quickly among the crypto community and the latest numbers back up the hype. Even though the presale started just a...

crypto reddit
Blog, Cryptocurrency, Investments, News, Price Prediction

7 Best Cryptocurrencies On Reddit To Invest In 2023

Blog, Cryptocurrency, Investments, Sustainability

The Clock is Ticking to Buy this Eco-Crypto – 7 Reasons C+Charge Will Explode Post-Presale!

savannah marshall fght
Blog, Cryptocurrency, News

Boxing World Champ, Savannah Marshall Partners with FGHT as presale approaches to $4 million!

Twitter Files

Elon Musk’s Twitter Pledges Free Write-Only API Access To Bots Creating “Good” Content