

Dell Said to Be in Buyout Talks With Private-Equity Firms - chrisaycock
http://www.bloomberg.com/news/2013-01-14/dell-is-said-be-in-buyout-discussions-with-private-equity-firms.html

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ChuckMcM
I find the fall of Dell a pretty fascinating story. In part because Dell
killed Compaq and a bunch of other PC 'clone' companies with a build-to-order
/ operational efficiency model.

Apple, a company that Dell never saw as a rival, was 'doomed' with its bespoke
computer design according to the best and brightest at Dell.

But what really put a crimp in Dell has been their dependence on Microsoft and
Intel. Being constrained in responding to changes in the world (like the rise
of non-Windows OS-X) by what Microsoft did, and early constraints by Intel
that prevented them from capturing some server market with AMD chips, when
Dell hit tapped out their ability to wring more value out of the supply chain,
they lost their growth engine. And then they looked at adjacent markets, but
with a clock ticking.

Trying to go too far afield into storage, briefly pumping up the music with
'boutique' computers, then committing a cardinal sin of using their customers
against themselves by creating a 'lock in' strategy with Dell custom parts
(motherboards, power supplies, and chassis).

So what keeps a company, when winds shift, from being nimble enough to shift
with them? I wish sometimes I could go listen to the discussion that happened
during the Opteron event, the Vista event, the first signs of OSX in the
enterprise, the Canonical/Linux discussion. That story probably won't come
out, and its too bad, I would love to read it.

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SandB0x
Good post. My frustration with Dell is that they never seem to launch any
consumer products with confidence and stick with them. It's always timid and
half-baked, and there's no rhyme or reason to their line of products.

There have been things like the Adamo laptop, Zino mini-pc, Streak tablet,
various different XPS sizes, but they inevitably get cannibalised and confused
by Dell's other products, and will be discontinued completely within 18
months.

Right now they have this slightly flimsy looking tablet-notebook hybrid:
<http://i.crn.com/products/xps_duo12_370.jpg> and I'm sure it'll be gone in a
year or two without any clear successor, and they'll lose any customers who
liked the product and bought into the idea.

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ChuckMcM
I've observed similar behavior in companies that are losing ground and trying
to find a 'hit' to pin the company on. A series of initiatives that run for a
while and then get pulled. This is especially true for a company that is too
afraid to invest in building a new market that may or may not develop, so
their 'me too' products come out fairly close to the existing market leaders
with a small amount of differentiation.

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hodder
Dirt cheap earnings yield, high return on cap, decent balance sheet, revenue
chugging along at a decent clip, and cheap on a FCF basis.

<http://www.gurufocus.com/financials.php?symbol=dell>

Smart financial move by Dell. He will rake in cash on Dell as a private
buiness, and he will have the increased autonomy he needs to run it.

I guess he's not a multibillionaire for nothing.

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TimGebhardt
Funny coming from the guy who said he'd shut down Apple and return all the
money to shareholders: <http://news.cnet.com/2100-1001-203937.html>

How's that Apple company doing anyway? :)

~~~
gfodor
Not too good today, actually!

~~~
roc
Apple has an incredibly long and prominent history of having its stock
manipulated by traders around the timing of new product events and quarterly
earnings statements.

When "today" is near one of those events, you probably don't want to anchor
your evaluations of the company to a short-window snapshot of stock
performance.

~~~
gfodor
It was more than a little tongue in cheek since AAPL is getting roiled in the
press today and yesterday over probably nothing.

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junto
Home PC sales were a strong part of Dell's income. Smartphones and tablets
(specifically the iPad) have killed the home PC market across the board. Dell
still has a strong server market and a strong B2B PC market (strong loyalty)
through Dell Premier, but the home PC market is irreversible dead.

I used to work for Dell and was part of their dev team when e-commerce was the
next big thing and sky-rocketed late 90's. I have always recommended Dell PCs
to friends and family. I write this on a Dell Precision T5500, which was a
beast (and still is) when I bought it 3 years ago. The build quality on their
top of the range products is excellent.

However, if my parents came to me today with a recommendation for a new PC,
I'd tell them to buy an iPad. They read (and rarely answer) their email, play
the odd game of Mahjong, and use Skype to keep in contact with their children
and grandchildren. They truly have no need for a PC anymore.

I can't count the number of times I have had to RDP into their virus ridden,
broken Windows installation, because they clicked on something they shouldn't
have and installed spyware or viruses.

We shouldn't forget that the "tablet market" used to be a joke. People what
chortle loudly about "stupid tablet devices" and how nobody would ever buy
one. Every tablet that came on the market was an abject failure. Then Apple
came along with the iPad. Everyone thought it was bound to be another tablet
dud. Everyone was wrong and Dell and Microsoft got caught with their pants
down - one fellating the other. Dell still haven't really got off their knees
to recover, but at least they can close their mouth now.

The iPad is a genius piece of kit. You really would struggle to break it. Even
my parents couldn't get PC style spyware on it if they tried. It is that
problem that Dell needs to crack. Microsoft have exactly the same issue and
both companies know it.

Children these days have no need of a PC either, because they have
smartphones. They keep in contact using Facebook chat or Whatsapp. When asked
about email the other day, a teenager we know replied "oh, our generation
don't use email. That's for oldies and besides you have to wait too long".

All of this is available to them via their phones - every second of the day.
They are always online and always in contact with their friends. Having a PC
means a fixed and non-movable connection to the internet, and they have to
share it with their parents and siblings. This includes monitoring by parents,
which with smartphones, is harder to do for most non-tech savvy parents.

Dell cut 75% of their product line and focus on a product that is better than
the iPad. Microsoft bought Nokia for their mobile "experience". They should
also consider Dell for their hardware experience. Their build-to-order process
and technology is second to none, let's not forget that.

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twog
Exactly what Dell needs. The leadership & vision of private equity firms.

~~~
antr
Worked when IBM spun-off its typewriter and dot matrix printer business and
the PE turned it into Lexmark; or the recent Leica turnaround (which is going
pretty well given the current economic climate).

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zandorg
Michael Dell himself has already diversified his assets away from Dell stock -
he's pretty rich.

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RexRollman
I really think Dell could learn something from Jobs's return to Apple, because
their product line is like a labyrinth.

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rootedbox
Dude you're getting a Dell!

