Dell reverses course, going public in $21.7B proposal

Posted:
in General Discussion
Apple rival Dell on Monday announced plans to take the PC maker public again, by way of a proposed common stock deal pegging its market cap at $21.7 billion.

Michael Dell with Apple co-founder Steve Jobs.
Michael Dell with Apple co-founder Steve Jobs.


VMware's tracking stock holders will be able to claim 1.3655 shares of the new common stock, Dell said, or else $109 in cash per share up to $9 billion in aggregate. The deal adds a 29 percent premium to Dell's closing price as of last Friday.

The VMware board of directors has declared an $11 billion cash dividend pro rata for all of its shareholders, contingent on completing other terms of the deal. Dell is expected to claim $9 billion from the dividend.

In a statement, Dell noted that the transaction "simplifies capital structure," and "positions Dell Technologies to build on its growing strategic and financial strength." The company will continue to own 81 percent of VMware's common stock.

Any leftover cash from the transaction will be used for future share buybacks or to pay down Dell's debt. VMware shareholders should end up owning anywhere between 20.8 and 31 percent of Dell, depending on how many people opt for cash instead of new shares.

Dell went private in 2013, giving CEO Michael Dell a majority stake in his namesake company. In all the transaction was valued at $24.4 billion, aided by a variety of sources, including a $2 billion loan from Microsoft.

The executive said going private would give his company the "time, investment, and patience" to make progress. It has increasingly shifted towards the enterprise market, particularly through its 2016 EMC takeover.

The company remains one of the biggest PC makers in the world, for instance beating the likes of Apple, Asus, and Acer in the laptop market. PC sales have struggled to maintain ground though given the growing flexibility of smartphones, tablets, and game consoles.
«13

Comments

  • Reply 1 of 56
    chasmchasm Posts: 1,396member
    If I read this right, the company has lost $3 billion in valuation since it went private.
    SpamSandwichStrangeDays
  • Reply 2 of 56
    bkkcanuckbkkcanuck Posts: 854member
    chasm said:
    If I read this right, the company has lost $3 billion in valuation since it went private.
    That hit me as a question, then I was wondering if the 21 billion they are talking about was the amount that was going to be sold on the market (not including the amount that will not be sold off during the IPO).
  • Reply 3 of 56
    lkrupplkrupp Posts: 6,940member
    “Dude, you’re getting a Dell”... again. :#
    welshdogtmaywilliamlondonjony0
  • Reply 4 of 56
    melgrossmelgross Posts: 31,507member
    The first deal was believed to be shady, with Michael Dell getting more than the proper amount of equity in the company. From what I’m reading about this one, it’s about to happen again.
    edited July 2018 JWSC
  • Reply 5 of 56
    macxpressmacxpress Posts: 4,823member
    If I were them, I'll shut down the company and give the money back to the shareholders....

    -Michael Dell 1997
    edited July 2018 chiaStrangeDayslamboaudi4MacPro
  • Reply 6 of 56
    melgrossmelgross Posts: 31,507member
    bkkcanuck said:
    chasm said:
    If I read this right, the company has lost $3 billion in valuation since it went private.
    That hit me as a question, then I was wondering if the 21 billion they are talking about was the amount that was going to be sold on the market (not including the amount that will not be sold off during the IPO).
    No, that’s the valuation of the company. Normally, the part available for sale is between 15 and 30% of the shares. But this deal is complex. That $11 billion for the dividend will have at least half end up in Micheals account. I’m sure that’s why they are structuring it this way.
    edited July 2018
  • Reply 7 of 56
    robin huberrobin huber Posts: 3,252member
    macxpress said:
    If I were them, I'll shut down the company and give the money back to the shareholders....
    Buy it and close it. 
    chiaSpamSandwich
  • Reply 8 of 56
    jimh2jimh2 Posts: 128member
    Shareholders will lose again in the end just like they did when it went private.
  • Reply 9 of 56
    racerhomie3racerhomie3 Posts: 1,056member
    Friends don’t let friends buy Dell .
    Say no to Dell.
    MacPro
  • Reply 10 of 56
    blastdoorblastdoor Posts: 1,908member
    Michael Dell has never been a product innovator. He was initially an innovator in distribution model, but then he really came into his own as an innovator in shady deals. The real secret to Dell's success for many years was a deal to completely shut out AMD in exchange for kickbacks from Intel. It was the dissolution of that deal under intense competitive pressure from the Athlon 64 X2 that ended that gravy train for Dell. Now Dell is innovating in the realm of shady stock deals. 
  • Reply 11 of 56
    maestro64maestro64 Posts: 4,520member
    jimh2 said:
    Shareholders will lose again in the end just like they did when it went private.
    I have to agree, Dell was hurting when it went private the stock was undervalue since Dell was making one bad decision after another and Walls Street was hammering them. Michael did this so he did not have to explain to Wall Street all the bad decision. It time to cash out, and take his money and run and let the market have its way with Dell again. Computer as not going away any time soon, but they are a commodity and its all about price anymore unless your Apple. Watch what happen the stock will run then the real world reality will hit and the stock will tank.
  • Reply 12 of 56
    melgrossmelgross Posts: 31,507member
    blastdoor said:
    Michael Dell has never been a product innovator. He was initially an innovator in distribution model, but then he really came into his own as an innovator in shady deals. The real secret to Dell's success for many years was a deal to completely shut out AMD in exchange for kickbacks from Intel. It was the dissolution of that deal under intense competitive pressure from the Athlon 64 X2 that ended that gravy train for Dell. Now Dell is innovating in the realm of shady stock deals. 
    Eh. I was never happy at the court decision in the Intel case. In virtually every industry, exclusivity deals are not only common, they’re standard.

    the truth is that nobody wanted an AMD chip in their machine, unless there was a hearty discount. Even after the deals were stopped, and didn’t get their foot in the door, because except for a short time, AMD  was a bargain chip company, not a performance leader.
  • Reply 13 of 56
    SpamSandwichSpamSandwich Posts: 30,994member
    “I’m on a highway to Dell!
  • Reply 14 of 56
    blastdoorblastdoor Posts: 1,908member
    melgross said:
    blastdoor said:
    Michael Dell has never been a product innovator. He was initially an innovator in distribution model, but then he really came into his own as an innovator in shady deals. The real secret to Dell's success for many years was a deal to completely shut out AMD in exchange for kickbacks from Intel. It was the dissolution of that deal under intense competitive pressure from the Athlon 64 X2 that ended that gravy train for Dell. Now Dell is innovating in the realm of shady stock deals. 
    Eh. I was never happy at the court decision in the Intel case. In virtually every industry, exclusivity deals are not only common, they’re standard.

    the truth is that nobody wanted an AMD chip in their machine, unless there was a hearty discount. Even after the deals were stopped, and didn’t get their foot in the door, because except for a short time, AMD  was a bargain chip company, not a performance leader.
    Kind of a different set of issues you raise there. Everything you say could be true without changing the fact that Dell is not a product innovator and that Dell benefited quite a bit from that deal. 

    But as it happens, I have some nits to pick with your assessment. 

    First, there was a stretch of several years when AMD was unambiguously the performance leader. The Athlon was superior to the Pentium 4 and the Athlon 64, especially the X2, was superior to the Pentium 4. AMD even was beating Intel in the server market for a period of time with Opteron, because Intel refused to make a 64 bit x86 chip (trying to push people to Itanium). 

    Second, exclusivity deals are common and generally legal, but the rules can, do, and should change when a monopolist (or near-monopolist) is involved. This is one of the things I love about Apple's business model -- they aren't close to being a monopolist in any reasonably defined market, so they can do all the exclusive deals they want. You don't like the terms for selling in the App Store? Well, go sell in the Google Play store to a much larger market. Apple's X-power is that they have antitrust prosecution resistance built into their DNA. 
    StrangeDaysronn
  • Reply 15 of 56
    maestro64maestro64 Posts: 4,520member
    To put this in perspective, Dell last Fiscal year made $78B and they employee 138,000 people so they make 1/3 as much as Apple and employee more people than Apple and keep in mind Apple has retail stores so they have a large number of people focusing on retail. Dell's employee to earning is not very efficient as compare to Apple's. Each Apple employee generate 3X more revenue for the company.

    Their tracking stock puts the market cap at $18B and they have been loosing money only recently have they turned any sort of profit. 
    edited July 2018 StrangeDays
  • Reply 16 of 56
    melgrossmelgross Posts: 31,507member
    blastdoor said:
    melgross said:
    blastdoor said:
    Michael Dell has never been a product innovator. He was initially an innovator in distribution model, but then he really came into his own as an innovator in shady deals. The real secret to Dell's success for many years was a deal to completely shut out AMD in exchange for kickbacks from Intel. It was the dissolution of that deal under intense competitive pressure from the Athlon 64 X2 that ended that gravy train for Dell. Now Dell is innovating in the realm of shady stock deals. 
    Eh. I was never happy at the court decision in the Intel case. In virtually every industry, exclusivity deals are not only common, they’re standard.

    the truth is that nobody wanted an AMD chip in their machine, unless there was a hearty discount. Even after the deals were stopped, and didn’t get their foot in the door, because except for a short time, AMD  was a bargain chip company, not a performance leader.
    Kind of a different set of issues you raise there. Everything you say could be true without changing the fact that Dell is not a product innovator and that Dell benefited quite a bit from that deal. 

    But as it happens, I have some nits to pick with your assessment. 

    First, there was a stretch of several years when AMD was unambiguously the performance leader. The Athlon was superior to the Pentium 4 and the Athlon 64, especially the X2, was superior to the Pentium 4. AMD even was beating Intel in the server market for a period of time with Opteron, because Intel refused to make a 64 bit x86 chip (trying to push people to Itanium). 

    Second, exclusivity deals are common and generally legal, but the rules can, do, and should change when a monopolist (or near-monopolist) is involved. This is one of the things I love about Apple's business model -- they aren't close to being a monopolist in any reasonably defined market, so they can do all the exclusive deals they want. You don't like the terms for selling in the App Store? Well, go sell in the Google Play store to a much larger market. Apple's X-power is that they have antitrust prosecution resistance built into their DNA. 
    It was about 2.5 years, when Intel was in the last stages of Netburst, and because of their crappy chip plants, and gave up trying to catch Intel in speed. So they cleverly did what Apple and partners were doing with the PPC, and went slow and wide. That saved them from the heat death Intel was experiencing. The Athlon had about a 10% performance lead, and about 5-10% better power draw. Good, but not great.

    However, after Prescott, Intel shocked everyone who thought they were in a death spiral, by going back to their M series and produced the Yonah, which is what convinced Apple to move to x86. That was thea beginning of the end for AMD, because again, they were far outclassed. With their incredible mistake with Bulldozer, which they stuck with for years and years, it seemed as though AMD was finished.

    with their new chips, they’ve regained some life. But as usual, by pricing their chips well below what’s needed for a good profit, they’re on the heavy discount bandwagon. The truth is, they could never sell their chips if they priced them for a good profit.
    edited July 2018
  • Reply 17 of 56
    dysamoriadysamoria Posts: 2,054member
    FFS, stay off the damned stock market. It's pathological, antisocial stupidity.

    [totally sincere, but ducks for the inevitable napalm attack]
  • Reply 18 of 56
    blastdoorblastdoor Posts: 1,908member
    melgross said:
    blastdoor said:
    melgross said:
    blastdoor said:
    Michael Dell has never been a product innovator. He was initially an innovator in distribution model, but then he really came into his own as an innovator in shady deals. The real secret to Dell's success for many years was a deal to completely shut out AMD in exchange for kickbacks from Intel. It was the dissolution of that deal under intense competitive pressure from the Athlon 64 X2 that ended that gravy train for Dell. Now Dell is innovating in the realm of shady stock deals. 
    Eh. I was never happy at the court decision in the Intel case. In virtually every industry, exclusivity deals are not only common, they’re standard.

    the truth is that nobody wanted an AMD chip in their machine, unless there was a hearty discount. Even after the deals were stopped, and didn’t get their foot in the door, because except for a short time, AMD  was a bargain chip company, not a performance leader.
    Kind of a different set of issues you raise there. Everything you say could be true without changing the fact that Dell is not a product innovator and that Dell benefited quite a bit from that deal. 

    But as it happens, I have some nits to pick with your assessment. 

    First, there was a stretch of several years when AMD was unambiguously the performance leader. The Athlon was superior to the Pentium 4 and the Athlon 64, especially the X2, was superior to the Pentium 4. AMD even was beating Intel in the server market for a period of time with Opteron, because Intel refused to make a 64 bit x86 chip (trying to push people to Itanium). 

    Second, exclusivity deals are common and generally legal, but the rules can, do, and should change when a monopolist (or near-monopolist) is involved. This is one of the things I love about Apple's business model -- they aren't close to being a monopolist in any reasonably defined market, so they can do all the exclusive deals they want. You don't like the terms for selling in the App Store? Well, go sell in the Google Play store to a much larger market. Apple's X-power is that they have antitrust prosecution resistance built into their DNA. 
    It was about 2.5 years, when Intel was in the last stages of Netburst, and because of their crappy chip plants, and gave up trying to catch Intel in speed. So they cleverly did what Apple and partners were doing with the PPC, and went slow and wide. That saved them from the heat death Intel was experiencing. The Athlon had about a 10% performance lead, and about 5-10% better power draw. Good, but not great.

    However, after Prescott, Intel shocked everyone who thought they were in a death spiral, by going back to their M series and produced the Yonah, which is what convinced Apple to move to x86. That was thea beginning of the end for AMD, because again, they were far outclassed. With their incredible mistake with Bulldozer, which they stuck with for years and years, it seemed as though AMD was finished.

    with their new chips, they’ve regained some life. But as usual, by pricing their chips well below what’s needed for a good profit, they’re on the heavy discount bandwagon. The truth is, they could never sell their chips if they priced them for a good profit.
    Yup, I agree with all this. 

    I'm amazed AMD is still in business after Intel struck back with their Core architecture. 

    But I think I might be more optimistic about AMD's chances now than it sounds like you are. For reasons that have little to do with AMD, we appear to be on the cusp of the unthinkable -- Intel losing the edge in fab process to the foundries. While volume production with Intel's 10nm process appears to be seriously delayed, at least until the second half of next year, TSMC is coming out with 7nm (what they call "7" is similar to Intel's "10") this year with the iPhone. And thanks to the petrodollars backing GloFo, AMD will have access to a similar 7nm process next year. It's very possible that AMD will beat Intel to the next process node with volume production of the Ryzen 3 (or whatever they choose to call it). Personally, I would not be buying Intel stock right now. 

    The foundries aren't advancing faster than Intel because they want AMD's business -- they're doing it because they want business from premium smartphone makers like Apple and, to a lesser extent, maybe Nvidia. But AMD gets to go along for the ride and 2019 could be a tough year for Intel.
    ronnMacPro
  • Reply 19 of 56
    rogifan_newrogifan_new Posts: 3,917member
    Friends don’t let friends buy Dell .
    Say no to Dell.
    Isn’t Dell basically a B2B company for small/midsize companies. Yeah they still sell consumer PCs but it seems like they’re more about technology solutions for businesses these days.
  • Reply 20 of 56
    rogifan_newrogifan_new Posts: 3,917member

    maestro64 said:
    To put this in perspective, Dell last Fiscal year made $78B and they employee 138,000 people so they make 1/3 as much as apple and employee more people than apple and keep in mind that apple has retail stores so they have a large number of people focusing retail. Dell employee to earning is not very efficient as compare to Apple, Each apple employee generate 3X more revenue for the company.

    Their tracking stock puts the market cap at $18B and they have been loosing money only recently have they turned any sort of profit. 
    They made 78B? That doesn’t seem right. Last fiscal year Apple’s profit was 48B. No way Dell makes more profit than Apple. Unless you’re referring to revenue?
Sign In or Register to comment.