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"Don't give DELL away to Michael Dell and P-E," might be the message of the value types who hold...

"Don't give DELL away to Michael Dell and P-E," might be the message of the value types who hold much of the company's stock. At least one investor is infuriated by the prospect of Dell repatriating cash from overseas - money it wouldn't use for dividends or buybacks - to help fund the LBO. An LBO at $15/share "would amount to insiders trying to steal the company," says Richard Pzena.
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Comments (10)
  • wyostocks
    , contributor
    Comments (9070) | Send Message
     
    So, Mr. Pzena is saying----Don't give the money to them; rather, give the money to ME.

     

    Man has got balls.
    19 Jan 2013, 12:31 PM Reply Like
  • june1234
    , contributor
    Comments (3230) | Send Message
     
    That co used to be a giant. $15 is more than its worth now. Nerve of some multinational binging back their cash hordes stateside
    Dell can see the writing on the wall. Days of people paying a couple of thousand $ for a laptop are over. They used to call city of Round rock outside Austin where Dell is still HQ'd Dellrock, Dellrock no more.
    19 Jan 2013, 12:32 PM Reply Like
  • medzjohn
    , contributor
    Comments (315) | Send Message
     
    This is the underappreciated risk of buying shares in a company with substantial founder/insider ownership. Instead of buyout gold you get the shaft.
    19 Jan 2013, 12:52 PM Reply Like
  • WallStreetDebunker
    , contributor
    Comments (3101) | Send Message
     
    Mr. Dell is smart. He's trying to buy the company before revenues and earnings get a bump from the next PC-replacement cycle and various acquisitions. This is a bad time for shareholders (other than Mr. Dell) to allow a buyout.
    19 Jan 2013, 01:58 PM Reply Like
  • rdumont99
    , contributor
    Comments (61) | Send Message
     
    Just because the most recent folks willing to buy DELL were doing so in the $10's and $11's doesn't mean this is the true value of the company - many more were holding shares believing the company's worth to be much higher, and wouldn't sell even at $14 or $15 (else there'd be a LOT more volume at present valuations). This LBO is really, as Pzena says, an opportunistic move based on low market valuations and large cash position allowing a leveraged acquisition of a company likely worth a lot more (now or soon, as per WallStreetD.... just above me), for relatively-short-term profit of the LBO participants.

     

    The board is legally bound by their fiduciary duty to shareholders. If the LBO price is perceived too low (which it will be, mark my words - else why would they do it), there will be multiple class action suits filed, and the board will need to prove in a court of law that they really felt this was best for shareholder value - i.e. the company needed the freedom of private ownership to have any hope of survival in the new world. We will find out that either A) the company was in far worse shape than we shareholders guessed, or B) we got screwed by an insider on the board (looking at you, Mr. Dell).

     

    How does my commenting help you as an investor make a decision at this point? It doesn't, sorry - but hopefully it gives you some comfort that no matter what the outcome, you're probably better off in the long run. The LBO fails, and we have validation of our assumption that there is value in DELL that is not realized. The LBO succeeds and DELL fails in a few years, and phew, lucky us! The LBO succeeds and we got screwed, we get some back via class action and our money is freed up with very good growth from Jan 1 2013, to put into our next value investment.
    19 Jan 2013, 04:19 PM Reply Like
  • LumiaMan
    , contributor
    Comments (324) | Send Message
     
    age of pricey PC s dead, bought my last pc at walmart a samsung 400 bucks, dell is dead for growth, can survive as a private, custom niche provider, forget it as mass volume seller
    20 Jan 2013, 03:00 AM Reply Like
  • DeepValueLover
    , contributor
    Comments (9720) | Send Message
     
    If PCs are dead then why is Dell still highly profitable?

     

    Perhaps they do more than sell PCs?
    20 Jan 2013, 03:22 AM Reply Like
  • LumiaMan
    , contributor
    Comments (324) | Send Message
     
    profitable is declining, dead as in long term grow, that is why DVL
    20 Jan 2013, 11:14 AM Reply Like
  • DeepValueLover
    , contributor
    Comments (9720) | Send Message
     
    If a business is profitable then it CAN'T be dead "long term" unless the profit falls to $0. Heck, PHONE BOOKS are still profitable!!

     

    So far there is NO evidence that Dell is going to go to $0 profit.

     

    Perhaps DELL should consider expanding its business to beyond PC sales. Perhaps they already have...
    20 Jan 2013, 11:21 AM Reply Like
  • Leo50
    , contributor
    Comments (133) | Send Message
     
    We waz robbed! To hell with Michael Dell!
    20 Jan 2013, 05:43 AM Reply Like
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