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Dell is considering taking the company private
TINMAN Michael Dell, chairman and CEO of Dell, has said that he is considering taking the company private.
According to Dow Jones, Dell was responding to a question at the Sanford Bernstein Strategic Decisions Conference but refused to say what made him consider such a move.
Dell said he was "totally committed to continuing to run the business for a long period of time" and will "continue running the company for the foreseeable future".
His comments sent the outfit's share price up a bit as Wall Street picked up on the news. Dell clearly has been doing a bit of soul searching. He told the analysts that he thinks his company has been a victim of its own success.
The huge amount of money the outfit made up until 2006 probably made the company complacent to challenges that caused it to struggle in recent years, Dell said.
He said that Dell has not finished transforming but it's seeing "some very encouraging signs in terms of our shift in the mix of the business to... enterprise services and solutions."
The company is starting to buy back shares from the market. It has a lot of cash in hand and Dell said the company needs to consider which cash is in the US and which resides abroad. He also said he expects that the company's recently resumed share repurchases will continue.
Michael Dell owns about 11.7 per cent of Dell stock, according to its recent proxy statement, so if he wants to buy out the company he will have to get some friends or lenders to help. µ
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Dell used to be a reasonably reliable, affordable, and flexible supplier. Now they are undifferentiated on price, really rip you off on upgrades, and persistently limit choice in order to carefully position different computer models.
This means no one bigger can buy them out. It also means they will have to make money from (gee golly) their actual business instead of investors.
I don't it will happen but if it should the quality should go up or he will find himself broke. It it unbelievable that company's can write-off such much money in losses and still stay in business.
If it where your own money it should be a different story. I have mixed about Dell computers to loving some and hating others and cost does not seem to be the main reason why some are better than others.
The simple fact of the matter is that what is causing the low stock performance is that the computer buying public is slowly starting to realise that there's something rotten at DHell. It didn't happen overnight though, but it really accelerated under the leadership of Kevin Rollins. Kevie convinced Mikey and his band of MBAs that the only thing that mattered was the World according to Excel and PowerPoint. Unfortunately, there's no columns for product quality or customer service in the World according to Excel and PowerPoint, so those ideas just fell by the wayside. DHell is finally seeing the effects of their shoddy workmanship and half-assed customer service, but Mikey taking the company private is not going to correct that one. The only thing that will produce the desired effect is to take the company back to the principles that made the company great. Unfortunately, Mikey is to enamored with his World to do that.
Back in the day Dell was both cheaper and better quality. Until the IPO. Then he lost control. Then they did all the creepy tricks, proprietary parts, substandard suppliers, etc. Nice to see he hasn't lost his soul. He just stopped listening to it for over a decade
Good luck Micheal.
P.S. It's amazing how crappy something can become when it is bought out, cough, cough, cough
If Steve jobs ever sends micheal dell an email with dells advice about winding up apple!
He said he'll take the company private, not buy all shares for himself, in practice this means that if majority of shareholders approve Dell would delist itself from stock markets and convert ALL outstanding stocks into equity ownership.
On a positive side a company can save huge amount of money going private because it no longer has to go through all the tedious reporting and operational costs (SEC filings, SOX, so on), but on a downside it cannot rais money by issuing new stocks (it has to raise more money from old/new equity owners which is a pain) and it also suffers from reduced investment confidence (the reporting requirements served to that end).
In terms of consumers it's a great thing because management is no longer oriented towards quick-profit-for-this-quarter-give-me-bonus tactic and the company can focus on what matters, building equity. That would in the end mean better goods from Dell.