Comments on: Why Dell is going private http://blogs.reuters.com/felix-salmon/2013/02/05/why-dell-is-going-private/ A slice of lime in the soda Sun, 26 Oct 2014 19:05:02 +0000 hourly 1 http://wordpress.org/?v=4.2.5 By: Kaleberg http://blogs.reuters.com/felix-salmon/2013/02/05/why-dell-is-going-private/comment-page-1/#comment-45859 Thu, 14 Feb 2013 17:21:59 +0000 http://blogs.reuters.com/felix-salmon/?p=20421#comment-45859 I think fxtrader7 has the right take on this. Basically, it’s a liquidation play. Dell, for all its flaws, is an operating company with decent financials. Sucking the life out of it and leaving an empty husk is good business.

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By: tmc http://blogs.reuters.com/felix-salmon/2013/02/05/why-dell-is-going-private/comment-page-1/#comment-45800 Sun, 10 Feb 2013 14:08:43 +0000 http://blogs.reuters.com/felix-salmon/?p=20421#comment-45800 If they stay public they will have to keep showing quarterly profits and live to the banksters expectations. If they take it private they can chop the company down to size, invest (a.k.a. loose money for a few years)and then could survive another two or three decades. If the Banksers have there way Dell will be a Shell within five years.

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By: crocodilechuck http://blogs.reuters.com/felix-salmon/2013/02/05/why-dell-is-going-private/comment-page-1/#comment-45787 Fri, 08 Feb 2013 04:27:37 +0000 http://blogs.reuters.com/felix-salmon/?p=20421#comment-45787 cont. http://taxanalysts.com/www/features.nsf/ Articles/D8A55EFE6CF17A3885257B01006D456 5?OpenDocument

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By: crocodilechuck http://blogs.reuters.com/felix-salmon/2013/02/05/why-dell-is-going-private/comment-page-1/#comment-45778 Wed, 06 Feb 2013 23:34:13 +0000 http://blogs.reuters.com/felix-salmon/?p=20421#comment-45778 cont. http://qz.com/51194/dell-buyout-works-as -a-tax-avoidance-scheme/

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By: dedalus http://blogs.reuters.com/felix-salmon/2013/02/05/why-dell-is-going-private/comment-page-1/#comment-45773 Wed, 06 Feb 2013 01:28:27 +0000 http://blogs.reuters.com/felix-salmon/?p=20421#comment-45773 By changing their capitalization from equity to debt, Dell Computer changes their relationship to their ever-constant (mostly silent) business partner — the U.S. Treasury — to whom in the future Dell can be expected to pay much less.

The deal is a tax-avoidance scam. But finding innovative still-legal ways to reduce taxes paid to the government is a “victimless crime” right?

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By: KenG_CA http://blogs.reuters.com/felix-salmon/2013/02/05/why-dell-is-going-private/comment-page-1/#comment-45772 Wed, 06 Feb 2013 00:35:49 +0000 http://blogs.reuters.com/felix-salmon/?p=20421#comment-45772 As I read more about this deal, I think the idea that they are doing this so they can “disrupt itself” or take risks is nonsense. Why can’t they do that now? What are they going to do, fire Michael Dell? Drive the price of the stock down? If that’s what they’re worried about, they should go ahead with their grand strategy and let it happen, so they get Dell for a lower price. Then when they execute their big ideas, they’ll make even more money.

Yeah, they have a secret plan just like Nixon did.

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By: Jjesse285 http://blogs.reuters.com/felix-salmon/2013/02/05/why-dell-is-going-private/comment-page-1/#comment-45769 Tue, 05 Feb 2013 22:33:30 +0000 http://blogs.reuters.com/felix-salmon/?p=20421#comment-45769 This all sound good and some of the point views are just about right, but will it work? I have been with Dell for seven year and hope that they can make the product a little better.

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By: crocodilechuck http://blogs.reuters.com/felix-salmon/2013/02/05/why-dell-is-going-private/comment-page-1/#comment-45768 Tue, 05 Feb 2013 20:37:44 +0000 http://blogs.reuters.com/felix-salmon/?p=20421#comment-45768 “For a company like Silver Lake, which is based in Silicon Valley and exists to turn around mature technology companies…..”

Felix,

Silver Lake doesn’t know anything about the PC business. Like Isaiah Berlin’s hedgehog, it knows only one thing: the tax deductibility of debt.

And keeping Michael Dell in the deal? Does this make the price even cheaper?

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By: realist50 http://blogs.reuters.com/felix-salmon/2013/02/05/why-dell-is-going-private/comment-page-1/#comment-45767 Tue, 05 Feb 2013 19:57:14 +0000 http://blogs.reuters.com/felix-salmon/?p=20421#comment-45767 Also, re valuation, Dell looks even cheaper on an enterprise value to EBITDA basis, which is typically how PE thinks about valuation. At $13.43 per share, Dell’s trading at 4.7x enterprise value to EBITDA, which is low. (By comparison, Apple has a similar P/E but is trading at 6.3x enterprise value to EBITDA).

My suspicion is that Dell has a fair amount of depreciation and amortization that doesn’t really represent necessary ongoing capital expenditures (as you’d traditionally expect with most D&A). Dell has completed around $12 billion of acquisitions in recent years, which means ending up with amortization of certain types of acquired intangibles (customer lists, intellectual property, etc.) It’s sort of screwy accounting because the ongoing costs of sales and R&D are expensed (and above the EBITDA line), so there’s an argument that post-acquisition net income takes a double hit. It’s one of the examples of how PE investors focus on cash flows and don’t worry much about non-cash items that are in accounting earnings.

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By: realist50 http://blogs.reuters.com/felix-salmon/2013/02/05/why-dell-is-going-private/comment-page-1/#comment-45766 Tue, 05 Feb 2013 19:45:47 +0000 http://blogs.reuters.com/felix-salmon/?p=20421#comment-45766 Said a bit differently, my sense is that there’s a sum of the parts valuation play here by the buyers. They’re looking at a company that’s a mix of an enterprise software and services business (high multiple), servers (mid-range multiple), and PC’s (low multiple) and buying it at a PC multiple. The home run outcome is a successful shift in business mix toward the first two businesses followed by going public again at a multiple based on those businesses, not PC manufacturing. The execution may or may not work, but it seems like a reasonable idea.

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