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Businesses The Almighty Buck Hardware

Michael Dell To Buy Dell Inc. 175

Posted by timothy
from the dell-by-any-other-name dept.
awarrenfells writes "After a shareholder vote, Michael Dell is expected to buy out and take Dell Inc. private. This move comes in the wake of plans to move Dell into position as an enterprise computing provider, but some analysts state this move may have come too late, much of the target market being taken by IBM and HP already." Nerval's Lobster provides some more details at Slash Cloud: "[T]he final buyout price was $13.75 a share, which includes a 13-cent-a-share “special dividend.” All told, that puts the deal’s price at $24.9 billion. In order to reach this point, Dell and Silver Lake had to fend off activist investor Carl Icahn and investment firm Southeastern Asset Management, which made their own combined play for a restructured capitalization. In a series of public letters, Icahn argued that Dell’s privatization proposal undervalued the company, and—at least until the beginning of September—made it very clear that he was willing to fight things out in court. By convincing the shareholders that his plan is the best route forward, Dell avoids what could have devolved into a very protracted and messy battle. Michael Dell wants to focus the majority of the company’s efforts on services, essentially remaking it into a tech firm more along the lines of IBM."
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Michael Dell To Buy Dell Inc.

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  • Good (Score:5, Insightful)

    by Anonymous Coward on Thursday September 12, 2013 @11:22AM (#44831365)

    We need more CEOs with egos tied to their companies. At least they don't just loot them and run...

    • by perpenso (1613749) on Thursday September 12, 2013 @11:42AM (#44831595)

      We need more CEOs with egos tied to their companies. At least they don't just loot them and run...

      I get the sentiment and there is a degree of truth there but here is a counterexample: Bernard L. Madoff Investment Securities LLC

      Always practice due diligence. Even if someone's name is on the sign, even if the founders are still running the place.

    • by mlts (1038732) *

      I much rather have people as stakeholders rather than shareholders in a corporation. Shareholders can just drop and run at any time, and really tend to not care about the long term future, assuming they have a sign of when to sell. Stakeholders are in it for the long haul.

      Sadly, due to the hedge fund BS and the shareholder lawsuits if a company decides to put off some quarterly profits into R&D, the long term road tends to be ignored. Hopefully this will change.

      I'm glad Dell is off the public exchang

    • by mjwalshe (1680392)
      The argument is is that exactly what Mr Dell is doing taking advantage of a depressed share price to buy the company on the cheap.
    • Re:Good (Score:4, Funny)

      by MrLint (519792) on Thursday September 12, 2013 @02:48PM (#44833687) Journal

      Flashback 1997 Micheal Dell says he would shit down apple and give the money back to the shareholders..
      http://news.cnet.com/2100-1001-203937.html [cnet.com]

      Well MIkey, perhaps you should do the same thing.

      • by mattack2 (1165421)

        He's not shutting it down, but he *IS* buying out existing shareholders and taking it private...

  • Dude! (Score:5, Funny)

    by Conspiracy_Of_Doves (236787) on Thursday September 12, 2013 @11:23AM (#44831389)

    He's getting Dell.

  • M.Dell (Score:5, Interesting)

    by djupedal (584558) on Thursday September 12, 2013 @11:24AM (#44831393)
    "Michael Dell wants to focus the majority of the company’s efforts on services, essentially remaking it into a tech firm more along the lines of IBM."

    Problem is, IBM committed to that approach years ago, in a different world. I'm not sure that would work today, given how long traction would take and how things will continue to evolve in the mean time. You can't commoditize this kind of thing, after all.
    • Re:M.Dell (Score:5, Insightful)

      by Anonymous Coward on Thursday September 12, 2013 @11:34AM (#44831515)

      > You can't commoditize this kind of thing, after all.

      Commoditize is the right word. When people hire professionals to provide services, they want to hire an expert. They want someone they can trust. Dell has always been about selling the lowest quality crap they can get away with and then not honoring their warranties.

      Just look at their recent keyboard fiasco. The KB212 drops keypresses, and Dell has decided that instead of honoring their warranty and replacing the keyboards that they instead would strike-out and insult the people that call them for replacements. When my boss called Dell about the eight we had that were dropping keypresses, they said that our employees that had trouble were incompetent and did not know how to use a keyboard. He is a Dell fanboy so he fired a couple people. He actually believes that the people that complained didn't know how to use a keyboard. That sort of dishonest crap over a $12 keyboard proves that Dell has no intention of ever becoming a trustworthy company.

      • Re:M.Dell (Score:4, Insightful)

        by Anonymous Coward on Thursday September 12, 2013 @11:45AM (#44831639)

        Firing people over broken keyboards? Wow, you should try to get out ASAP!

      • by sribe (304414)

        Commoditize is the right word. When people hire professionals to provide services, they want to hire an expert. They want someone they can trust. Dell has always been about selling the lowest quality crap they can get away with and then not honoring their warranties.

        For consumers, small businesses, even medium businesses, yes, absolutely. I have my own share of horror stories, with Dell support outright lying to my face about warranties.

        But if you're a big enough business to deal with their enterprise support, it's a whole other world. Call up support about a broken part, no questions asked, the replacement is in your hands 2 hours later!

        • As always, you get what you pay for.

        • This is my exact experience.

          Consumer side is crap service, lowest cost commodity components. Dell Enterprise grade is really worthy of that name. What gets me, is that people want Enterprise Support at Consumer Pricing, and there is no such thing. I Laugh at the people who say "I can build a NAS for so much less" (so can I, but my job isn't worth saving a few bucks over) and then complain about how it failed spectacularly. The same people think that RAID is backups and backups are RAID. I don't even bother

        • by mlts (1038732) *

          Nail, head hit. Consumer-level and business grade products by any PC maker are completely different animals when it comes to service, parts, support, and repairs.

          As a consumer or someone running a SOHO, the only PC vendor that has decent consumer level support is Apple. The ironic part is when one buys a business level machine (Latitude, Optiplex, Precision), the price difference between that and an Apple product of similar features [1] is fairly narrow.

          [1]: Harder to make like comparisons these days, no

      • I'm gonna make the presumption here that you don't have Gold support from Dell. Their m.o. is to treat you like shit until you buy the gold contract, and then treat you like, um, gold. That's where the money is - the boxes are loss-leaders, or at least minimal-margin devices that probably just break even.

        If you boss is a fanboi, tell him to buy the gold support contract - it will make your life easier, and if you're stuck in a Dell shop, you likely don't need more aggravation anyway. Heck, outsource all

      • Get a new job. You're working for an idiot.

      • I've never heard of this, and I have about 50 people who use 212's daily who would come to me to see if I had a spare..

        I'm not saying it doesn't happen. It just must be very hit and miss.
    • "Services" encompasses rather a lot of possible avenues. Google and IBM aren't (for the most part) competitors, but their products both constitute "services".

      That said, I'm not sure I understand where Dell is heading with this one. IBM had a significant business that wasn't "Putting new PCs in boxes and selling them" when it transitioned away from PCs. Dell... every corporation I've worked for has bought Dell computers, specifically, and outside of warranty and equipment rental services, I'm not sure wha

      • But I'm an idiot programmer who posts to Slashdot and has no money and no insight into Dell's thinking.

        Dell has a large chunk of cash in the bank. The purchasers now get that cash instead of the stockholders, so that's why it is worth taking private. That is also why Carl Icahn thought it was worth fighting for.

        I have no clue if they're going to do anything really different with the business, though. Maybe just grow smaller and smaller over time.....

        • by mlts (1038732) *

          If I were to guess how they will go, it probably will be focusing on enterprise stuff, like 40 to 100gigabit ethernet for storage fabrics, Hyper-V clusters using Windows Server 2012's deduplication and autotiering [1].

          Done right, they will have a decent SDDS stack that can go toe-to-toe with EMC and VMWare, except with an advantage in price.

          Dell also has some interesting rebranded stuff. A smaller installation can use a RDX hard drive cartridge silo instead of tapes for offline saving of data.

          It will be in

      • by SQLGuru (980662)

        Dell's commodity services are generally centered around selling hardware: hardware roll-out (desktop/laptops to all seats), server install / config / upgrade, Exchange migrations, etc. Basically tasks that are more tightly controlled in terms of scope and complexity. They also purchased what was Perot Systems for less commodity type services.

      • by unixisc (2429386)
        I think by 'services', they mean outsourcing services. Not necessarily offshoring services (although they have that too) but essentially, the IT and Business Process outsourcing services. Essentially, the ex-Perot Systems team (currently populated by ex-Wipro personnel) and the people who make Dell essentially a competitor to IBM & HP, not in terms of computer servers or hardware, but rather as a competitor to IBM, HP, Accenture, Cognizant, Capgemini, et al
    • The question is if Dell can challenge IBM, SAP, HP, et al at "services" for IT systems?

      Then the question is can Michael Dell get the executives with the skills and vision to make it happen in an arena that is cutthroat.

    • by steelfood (895457)

      You can argue that IBM had always sold services to the enterprise. Mainframes built and deployed in the 60's are still running today, and IBM continues to support them like they did over 50 years ago.

      The restructuring they did in the 90's was merely changing from a hardware-centric service model to a software+hardware model. That, and they cut their consumer devices division that was turning into a cancerous tumor.

      Dell once had incredible enterprise support. For a while, they were know as the company to buy

  • by Anonymous Coward on Thursday September 12, 2013 @11:24AM (#44831399)

    I'd shut it down and give the money back to the shareholders

    • Well, he's not shutting it down, but what do you think it means when they say he is going to "buy Dell"? It means that he is going to give money to the other shareholders in exchange for their share in Dell.
      • by MightyYar (622222)

        Yes, there is some delicious irony there.

        • No the Delicious Irony is Apple is giving money back to shareholders...to protect its share price. When it should be doing something exciting with that money.

          • by MightyYar (622222)

            I'd rather they give it to me than sit on it or spend it recklessly. You can only ramp up your organization so fast, and efficiencies are lower beyond a certain organization size (Microsoft -ahem-).

            I bought Apple and Dell after the tech crash. Guess which stock I'm happier with? :)

          • It would *actually* be ironic if Apple was not still growing their cash position, even when giving back a dividend.

            But they're doing both.

            • It would *actually* be ironic if Apple was not still growing their cash position, even when giving back a dividend.

              But they're doing both.

              ...But in context of this article they didn't buy Dell...or Netflix...or Blah blah blah, While their profits shrink, Market Share (and sales in case of its iPad/Mac) shrink, Gross Margin compressed. There response has been to over promise and under deliver. The result the iPhone 5C and 5S I think they speak for themselves.

              • If you think buying Dell or Netflix is, to use your words, 'exciting', then you're more delusional than when you just cheer on Google.

              • by unixisc (2429386)
                When they price their products a certain level, they are automatically clamping their available market, and their profits are going to be a a fraction of that. The decision for them to make is whether they want their profits to be based on a higher margin on a lower marketshare, or a lower margin on a higher marketshare. The PCs and Androids have already demonstrated the economics of the latter model, while Apple has done really well with the former. They'd have to be really inane to listen to people her
          • So for years, everyone bitches that Apple doesn't give dividends and doesn't do stock buybacks because they are putting the money back into the business.

            Then Apple declares a dividend and a stock buyback initiative, and now people bitch that they should be putting that money back into the business.

            It seems to me that people just want to bitch.

            • So for years, everyone bitches that Apple doesn't give dividends and doesn't do stock buybacks...

              ...and Steve Jobs told them to Jump, and did so because Apple was a growth stock not a value stock, buybacks/dividends are what you do with a value stock.

    • I'd shut it down and give the money back to the shareholders

      Yeah! Those 109,000 employees can just go fuck themselves.

      • I'd shut it down and give the money back to the shareholders

        Yeah! Those 109,000 employees can just go fuck themselves.

        http://news.cnet.com/2100-1001-203937.html [cnet.com]

        And at the Gartner Symposium and ITxpo97 here today, the CEO of competitor Dell Computer added his voice to the chorus when asked what could be done to fix the Mac maker. His solution was a drastic one.
        "What would I do? I'd shut it down and give the money back to the shareholders," Michael Dell said before a crowd of several thousand IT executives.

        I'm sure Michael Dell really really cared about those thousands of Apple employees too. No one is shutting down, but as a high-profile public figure, he ought to have thought twice before he said shit that was destined come back to bite him.

    • I'd shut it down and give the money back to the shareholders

      Why? Are you a shareholder? Will you be after the buyout? Do you have any self-serving reason to shill for shareholders?
      If not, you're trolling. Time wasted. Get a life.

  • If you own(ed) part of Dell in the past, how's this impact you?

  • Didn't have any problem when I used them ~5 years ago. Not sure how they are now but if you are just running Linux/windows I found them fine and their support was good (in europe at the time anyways). We still had Sun boxes kicking around for special needs but otherwise we were commodity. With a SAN setup and most if not all data living on disk arrays the servers take a back seat somewhat. You might die but you won't lose data which was the biggest thing in internal IT services were I worked and likely ever

    • by MightyYar (622222)

      Not sure how they are now but if you are just running Linux/windows I found them fine and their support was good (in europe at the time anyways).

      That's the problem. They are a "fine" player in a commodity market with declining volumes. They made a couple of half-hearted attempts at other markets: personal organizers, re-badged iPods, phones, reselling TVs, etc. But their margins will always reflect their business model, and they have chosen a very low-margin model. In other words, they kind of won the race to the bottom. I'll miss them if they exit the PC market - I think competition is a great thing, even if I was unwilling to hold their shares any

      • Lately they've been on a buying spree that only rivals Cisco. They bought Wyse in order to play in the thin client space for enterprise. They bought Quest Software in order to get identity management and software two-factor security solutions. They bought Credant Technologies for a software disk encryption suite that supports key escrow and central policy management. Etc.

        They are trying to purchase their way further into the enterprise market.

  • by CohibaVancouver (864662) on Thursday September 12, 2013 @11:28AM (#44831441)
    I work for a company that makes a Software-as-a-Service product. Our main sales channel is via OEMs like Dell. With hardware margins in the toilet the OEMs are all trying to realign themselves as 'service vendors' but they're not having much luck. It's my experience that it's very difficult to realign a sales team used to asking "Would you like a case and an SSD drive upgrade?" to one that sells high-margin services. The type of salesperson you need is much more expensive & sophisticated. You need to invest millions in training, marketing and support. Can be done of course (witness IBM) but it's a long, expensive process.
    • by alen (225700)

      IT people would be dumb to ask for these since most of them are simple things like installing and migrating a MS Exchange environment to new hardware and software. or installing Windows with a new PC purchase. the prices are very high for jobs that your IT department is already getting paid to do

      as an IT drone why would i send a PO to my management for approval with a line item to install software that i'm already getting paid to support?

    • There might be some people who love their Dell sales rep, but most see them as a commodity. Shops who order Wintel from Dell and have the Gold contract are about easy and mainstream, not about shopping for the best pricing on the best solutions, and those represent a lot of the well-monied corporate interests in the US.

      Dell has as much a chance at this as anybody else. When it comes down to it, if both Dell and HP are offering the same service and the client is already a Dell customer, it's *very* unlikel

  • The company has been stuck in idle for years and is now in reverse due to macro trend from desktops/laptops to tablets. The oft-repeated claims from private equity guys is that a company has a better chance to succeed if it doesn't have to deal with the demands of being a public company. Demands like growth, profitability, aka success. I don't get it. Maybe they can enact longer-term business plans that would torpedo the stock price if it were a public company...but isn't the idea of every public company to
    • Demands like growth, profitability, aka success.

      What a limited view of what makes a business successful.

      Yeah, I know this is the corporate view. But just because it's the corporate view doesn't make it right. And unlimited growth is also called cancer.

      • by JoeyRox (2711699)
        Unless your investing in a charity or for charitable/social change reasons it's the only view that makes objective sense. A business requires a return on investment otherwise it has no reason to exist in the eyes of investors/shareholders.
    • by alen (225700)

      pension funds and other large investors who own most of the stock hate risk. and a down and out company like dell will never be able to implement a risky plan without a shareholder revolt. CALPERS and the NY State pension plans will kill the idea.

      going private means someone else is taking on the risk. usually rich people who invest in these things knowing the risks involved

    • Maybe they can enact longer-term business plans that would torpedo the stock price if it were a public company...but isn't the idea of every public company to maximize the long term value of shareholders?

      No. The goal of a public company is to maximize SHORT TERM profits. If you lose money or only generate small profits because you are working on a long term plan that will eventually have a big pay off, you will most likely get fired.

      • This is in fact what happened to JC Penny. They were lagging behind Kohl's et. al. in the discount retail market, so they brought in a new CEO who implemented a new business model based on no-bs pricing. The model was a great way of differentiating themselves, and probably would have paid off if given enough time for consumers to get used to it. But when consumers didn't jump on the model instantly and they had a couple of bad quarters, the CEO was fired before the model was given enough time to see if it c

  • ... but some analysts state this move may have come too late, much of the target market being taken by IBM and HP already.

    And before Google, much of the target market had been taken by Alta Vista. And the NFL had a lock on pro football. And Sony had a lock on portable entertainment devices. And Microsoft on operating systems. HP on printers. Ford/GM/Chrysler.

    • by LMariachi (86077)

      The NFL doesn’t still have a lock on pro football? Is the XFL coming back?

      • by jamesl (106902)

        The American Football League (AFL) was a major American Professional Football league that operated from 1960 until 1969, when it merged with the National Football League (NFL).

        The upstart AFL operated in direct competition with the more established NFL throughout its existence.

        While many AFL players and observers believed their league was the equal of the NFL, their first two Super Bowl performances did nothing to prove it. However, on November 17, 1968, when NBC cut away from a game between the Jets and Ra

  • I know - a company I worked for got bought by Dell a couple years ago. We watched as benefits got wiped, and the switch to a new platform meant WORSE service for our clients. A bunch of us jumped ship.
    • I know - a company I worked for got bought by Dell a couple years ago. We watched as benefits got wiped, and the switch to a new platform meant WORSE service for our clients. A bunch of us jumped ship.

      Your statement is a little ambiguous

      I imagine you're saying "Michael Dell bought our company" and Dell Inc. is now screwed.

      But it also reads like "Dell Inc. bought our company" in which case you're saying that Michael Dell has his work cut out for him (aka, Michael Dell is going to be busy trying to right the ship)

    • by Deflagro (187160)

      As a previous employee for over a decade, I was on the team that started their foray into "services" and you may have a point. MD will always want to develop his own software and use that in lieu of acquisitions of companies that actually know how to develop sw.
      We tried using a Dell developed sw on a huge services client and it failed horribly nearly costing Dell the whole account. Acquiring Perot brings that knowledge to the table but the philosophies are so different between the two that it will take some

  • Dell is positioning itself as a enterprise computing provider just when the consumer market is taking off. Where are its Meego Phones; Chromebooks and *Next Generation PC*...the phone space is not the only place that can be innovative. Dell strength was logistics how about they get back to that only supplying interesting products.

    • by LMariachi (86077)

      Dell going into the interesting products business is a much bigger leap than going into the services business.

    • by ISoldat53 (977164)
      Mike is not into "interesting." He is the most conservative person in the industry. Dell hasn't come up with an interesting product in a decade.

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