logo
  Join        Login             Stock Quote

Raw Dell Deal

 February 07, 2013 10:23 AM
 


Our own Dell (DELL $13.52) will go private for $24.4B, or $13.65 per share, paid by Michael Dell, Silver Lake, and Microsoft. With our cost basis at $15, we were hoping for more, and we weren't alone. Major shareholders are angry, calling this a shady insider deal by Michael Dell to protect his wealth at the expense of the shareholders that he and other management so badly disappointed over the past decade's litany of botched operations and missed opportunities. A short list: No PC innovation, whiffed smartphones, missed tablets — nice work for a tech company.

Bernstein Research said that if Dell uses 40 pct of its annual cash flow to pay down its debts, a sale of the company in five years could put a cool $10B into the pockets of Michael Dell, Silver Lake, and Microsoft. Thanks for nothing! Bernard Lanigan, who runs a wealth management firm in Georgia, told Reuters: "This price is ridiculously low and looks like Michael Dell and all are trying to steal the company from shareholders. We cannot believe the board would allow this inside deal at this low price." Agreed. Our DCF analysis of the firm showed why management is giving up on the business model and is probably going to scrap it entirely and pursue a sum-of-the-parts sell-off to squeeze out whatever value is left, but will do so after sloughing off existing shareholders at less than $14 per share.

[Related -5 Key Takeaways From International Business Machines Corp. (NYSE:IBM)Troubles]

Michael Dell's bad management of his firm contributed to the stock sell-off that makes it so cheap for him to buy out. On top of that, he'll probably repatriate foreign assets to help pay for the buyout after he decided not to do so as a way of compensating shareholders through dividends. Classy. The remainder of his life may be marked by shame, but not poverty.

iOnTheMarket Premium
Advertisement

Advertisement


Post Comment -- Login is required to post message
Name:  
Alert for new comments:
Your email:
Your Website:
Title:
Comments:
 

rss feed

Latest Stories

article imageOld Bank's New Breakout has Big Rally Potential

One of my favorite things to see in a long candidate is a pattern of beating Wall Street's earnings read on...

article imageIs The Stock Market's 5-Year Return A Useful Proxy For Valuation?

Tobin’s Q, a market-valuation metric, is back in the news, in part thanks to a widely read Bloomberg read on...

article image4 Dogs To Sell Immediately

Despite the chorus of analysts and investors calling for the long-awaited correction, the market is showing read on...

article imageThe Fed's Magical Mystery Tour

What's going on at the Fed? Notorious dove, Charles Evans of the Chicago Fed, gave a speech in read on...

Advertisement
Popular Articles

Advertisement
Daily Sector Scan
Partner Center



Fundamental data is provided by Zacks Investment Research, and Commentary, news and Press Releases provided by YellowBrix and Quotemedia.
All information provided "as is" for informational purposes only, not intended for trading purposes or advice. iStockAnalyst.com is not an investment adviser and does not provide, endorse or review any information or data contained herein.
The blog articles are opinions by respective blogger. By using this site you are agreeing to terms and conditions posted on respective bloggers' website.
The postings/comments on the site may or may not be from reliable sources. Neither iStockAnalyst nor any of its independent providers is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. You are solely responsible for the investment decisions made by you and the consequences resulting therefrom. By accessing the iStockAnalyst.com site, you agree not to redistribute the information found therein.
The sector scan is based on 15-30 minutes delayed data. The Pattern scan is based on EOD data.