In trading on Wednesday, shares of Dell Inc (NASD: DELL) crossed below their 200 day moving average of $12.41, changing hands as low as $12.28 per share. Dell Inc shares are currently trading off about 3.3% on the day. The chart below shows the one year performance of DELL shares, versus its 200 day moving average: …read more
Source: FULL ARTICLE at Forbes Markets
A special committee of the Dell Inc. board says Carl Icahn has agreed to cap his stake in the personal computer maker while the panel considers competing takeover bids from the billionaire investor, a group led by CEO Michael Dell and buyout specialist Blackstone Group.
By Business Wirevia The Motley Fool
Filed under: Investing
Dell Special Committee Addresses Icahn Request for Expense Reimbursement
ROUND ROCK, Texas–(BUSINESS WIRE)– The Special Committee of the Board of Directors of Dell Inc. (NAS: DELL) today sent a letter to Carl Icahn addressing his request for expense reimbursement in connection with the alternative transaction he has proposed to the definitive merger agreement between the company and entities owned by Michael Dell, Dell’s Founder, Chairman and Chief Executive Officer, and investment funds affiliated with Silver Lake Partners.
The letter follows:
April 5, 2013
Mr. Carl C. Icahn
Icahn Enterprises, L.P.
767 Fifth Avenue, 47th Floor
New York, NY 10153
Expense Reimbursement
Dear Mr. Icahn:
This is in response to your request to the Special Committee of the Board of Directors (the “Special Committee“) of Dell Inc. (“Dell” or the “Company“) that Dell reimburse you for your expenses in pursuing a potential transaction involving the Company.
The Committee has carefully established an open and thorough process intended to result in a sale of Dell on the best available price and terms. We have welcomed your participation in that process, which has resulted in your submission of a proposal that the Committee has determined could reasonably be expected to result in a “Superior Proposal” within the meaning of Dell’s merger agreement with affiliates of Silver Lake Partners and Michael Dell. We encourage your continuing participation in our process, and hope that you will in fact submit a proposal we can determine to be superior to the currently pending merger.
At the same time, however, you have threatened the Company’s directors with “years of litigation” and a proxy fight if they do not conduct the transaction process in the manner you prefer. You have also sought a special waiver of Delaware’s business combination statute not only to facilitate your acquisition proposal within our process, but also your ability to contest that process and to pursue your goals outside of it.
We are willing to provide you with the same expense reimbursement that has been made available to the other two bidders if you will commit contractually to work within our process, but we are not prepared to do so as long as you, unlike them, reserve the right (and continue the threat) to subvert it with a proxy fight, litigation and other tactics that would prolong the instability and uncertainty facing the company. Our …read more
Source: FULL ARTICLE at DailyFinance
By Reuters
Filed under: Dell, Scandals and Lawsuits, Stocks, People
Michael Steinberg, a portfolio manager at Steven A. Cohen’s $15 billion hedge fund, was arrested by the Federal Bureau of Investigation at his home in New York City early on Friday morning in connection with a long-running insider-trading investigation, an FBI spokesman said.
Federal prosecutors had been considering indicting Steinberg on charges that he traded shares of Dell Inc. (DELL) on insider information, sources close to the matter said on Thursday.
Steinberg’s lawyer Barry Berke said in a statement to Reuters that his client had done “absolutely nothing wrong.”
“At all times, his trading decisions were based on detailed analysis as well as information that he understood had been properly obtained through the types of channels that institutional investors rely upon on a daily basis,” Berke said.
Steinberg, 40, is the most senior SAC Capital Advisors employee to be charged in the U.S. government‘s probe into how hedge funds may use illegally obtained information to trade. Including Steinberg, nine people have been either charged or implicated with wrongful trading while they were employed at the Stamford, Conn.-headquartered SAC.
An SAC Capital spokesman had no immediate comment on the arrest.
Steinberg’s arrest had been widely expected after Jon Horvath, a former SAC analyst who worked closely with him, pleaded guilty last year to using illegally obtained information to trade in Dell and Nvidia Corp. (NVDA). Horvath has been cooperating with the government and had implicated Steinberg.
SAC Capital suspended Steinberg from his post in October 2012, and he has been moving among several hotels in New York City in recent weeks, according to Reuters sources, as he wanted to avoid being arrested at his Upper East Side home where he lives with his wife and two children.
The arrest comes two weeks after SAC agreed to pay a record $616 million to the U.S. Securities and Exchange Commission to settle civil charges of insider trading. SAC neither admitted nor denied wrongdoing at that time.
But the government made clear that that settlement didn’t preclude further charges.
As part of that settlement, SAC Capital agreed to pay $14 million to settle charges of improper trading in Dell, in which a former trader who reported to Steinberg had been involved.
Michael Dell and Silverlake Partners have offered $13.75 per share to take Dell Inc. private. Large shareholders have resisted the price which they believe undervalues the company. Now Carl Icahn and Blackstone Group have made other offers based on their review of Dell’s books but they really aren’t much higher than the original offer. Major Competitors Lenovo and Hewlett Packard also took advantage of the “go shop” opportunity to sign confidentiality agreements to look at the Dell books and learn about the cost structure of a key competitor. They would have been stupid not to avail themselves of the free peak. …read more
Source: FULL ARTICLE at Forbes Latest
By David Schepp
Filed under: Company News, Dell, Electronics, Stocks, Investing
Michael Dell may face some competition in his effort to take over the computer maker he founded.
The Wall Street Journal reported on its website Saturday that buyout specialist Blackstone Group and activist investor Carl Icahn have both notified a special committee of Dell Inc.’s (DELL) board that they are working on bids for the company.
Michael Dell and a group of investors announced their bid, valued at $24.4 billion, in early February. The Round Rock, Texas, company’s board then set a 45-day period to allow for offers that might top that bid. That period expired Friday.
The Journal, citing unnamed sources, reported that the notification will allow Blackstone and Icahn four more days to develop their offers.
A Dell representative declined comment on the report. Blackstone and Icahn representatives didn’t immediately return calls from The Associated Press seeking comment.
Icahn and other investors have criticized the $13.65 a share offer from the Michael Dell group as being too low. Several buyout scenarios tying Blackstone to Dell have been leaked to the media this week. Dell shares closed Friday at $14.14, an indication that investors expected to see a higher bid. Some analysts have predicted Dell ultimately will be sold for $15 to $16 a share.
Southeastern Asset Management, Dell’s second largest shareholder after Michael Dell, has asserted the company is worth closer to $24 a share.
For its part, the four-member board committee maintains it’s selling Dell at a fair price, one that reflects the dimming prospects for the PC industry as more technology spending shifts to smartphones and tablet computers.
Dell, the world’s third-largest PC maker, has said Friday’s deadline for competing offers could be extended if its board believes other suitors would benefit from more time to examine Dell’s books and hash out other details.
The company has promised to provide extensive details about the sales process in regulatory documents that are supposed to be filed next week.
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Filed under: Technology, Hewlett-Packard, Dell, General Electric, Computer Industry, Electronics, Stocks
By MICHAEL LIEDTKE
SAN FRANCISCO — Is Michael Dell‘s attempt to gain more control over his company about to turn into a financial tug-of-war?
The answer could come Friday. That’s the end of a 45-day period that Dell Inc.’s board of directors set to allow for offers that might top a Feb. 5 deal to sell the personal computer maker to CEO Michael Dell and a group of investors for $24.4 billion.
With the deadline looming, buyout specialist Blackstone Group is emerging as the most likely candidate to trump the current bid of $13.65 a share.
Blackstone is so intrigued with the prospect of owning Dell that the firm has been courting former Hewlett-Packard Co. (HPQ) CEO Mark Hurd to run Dell if it decides to mount a hostile takeover attempt, according to a person familiar with the situation. The person asked not to be identified because the discussions between Blackstone and Hurd are considered confidential.
Several other buyout scenarios tying Blackstone to Dell have been leaked to the media this week, another indication that the New York firm is mulling a bid that could scuttle the debt-laden deal that the company reached with Michael Dell and Silver Lake Partners.
Dell Inc. (DELL) says Friday’s deadline for competing offers could be extended if its board believes other suitors would benefit from more time to examine Dell’s books and hash out other details. The company, which is based in Round Rock, Texas, has promised to provide extensive details about the sales process in regulatory documents that are supposed to be filed next week.
Many investors are convinced a higher bid is in the works. That’s why Dell’s stock price has remained above $14 for the past two weeks. The shares fell 19 cents Thursday to close at $14.14. Some analysts have even predicted Dell ultimately will be sold for $15 to $16 a share.
Southeastern Asset Management, Dell’s second largest shareholder after Michael Dell, has asserted the company is worth closer to $24 a share.
For its part, the four-member board committee that negotiated the current deal maintains it’s selling Dell at a fair price, one that reflects the dimming prospects for the PC industry as more technology spending shifts to smartphones and tablet computers.
The upheaval is siphoning revenue away from both Dell, the world’s third largest PC maker, and HP, the top PC maker. Both companies are trying to adapt by making more tablets and diversifying into more profitable areas of technology, such as business software, data analytics and storage.
The rivalry between Dell and HP makes …read more
Source: FULL ARTICLE at DailyFinance
Filed under: Rumors
Financial firm Blackstone Group L.P. (NYSE: BX) may make a offer to take Dell Inc. (NASDAQ: DELL) private, an offer that would be higher than one from Michael Dell and Silver Lake. Such a move would be risky, given on the PC firm’s earnings and the future of its major businesses.
A new Dell owner would have several options. The most obvious would be to cut costs through significant layoffs. Or, Dell could sell some of its divisions. The first risks cutting muscle along with fat, particularly because Dell already has had rounds of layoffs. The second risks that an auction of Dell businesses will bring disappointing results.
A new Dell owner could just fire people as sales decline, particularly at its PC division. It is an ages old tactic that sometimes works, if the balance is perfect. Cut too much and a legacy business that could make money for a while, even as its shrinks, could be understaffed. Cut too little and the chance to maintain some level of operating income disappears.
Dell still makes enough money that lower expenses might preserve operating income, but that current operating level may be too low to support a large load of debt. Dell’s net income last year was $2.4 billion, down from $3.5 billion the previous year. Margins at the consumer PC division, which is about a fifth of Dell’s revenue, fell just below zero as the revenue from this operation dropped 20%. That left Dell’s sales to businesses and enterprises to make up some of the revenue. However, enterprise sales face efforts from more successful rivals like Oracle Corp. (NASDAQ: ORCL) and International Business Machines Corp. (NYSE: IBM). Even severely crippled rival Hewlett-Packard Co. (NYSE: HPQ) remains in many of these businesses. HP maybe wounded but it is not dead.
Dell’s other large business is its services division, which has been troubled for several years. Dell has tried to bolster this segment through a frenzy of M&A, the most notable being the purchases of EDS and Perot Systems. The net effects of these transactions were write-downs based on analyses that Dell had paid to much.
With problems at many Dell divisions, it is hard to understand which it could sell for much, unless it wants to jettison the only operations that make substantial money.
Private equity purchases of large public companies generally are based on the idea that a private company can be better run than a public one, even if it is saddled with debt. So little about Dell is attractive that it is impossible to see how that would work.
Filed under: 24/7 Wall St. Wire, Mergers and Buy Outs, PC Companies, Rumors Tagged: BX, DELL, featured, HPQ, IBM, ORCL
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Filed under: Investing
The U.S. Securities and Exchange Commission (SEC) said today that the CR Intrinsic unit of hedge fund SAC Capital has agreed to pay $600 million to settle insider trading charges brought by the SEC against the firm. Another unit of SAC Capital, Sigma Capital Management, has agreed to pay a fine of nearly $14 million to settle charges that it engaged in insider trading in shares of Dell Inc. (NASDAQ: DELL) and Nvidia Corp. (NASDAQ: NVDA) in 2008 and 2009.
A former SAC Capital, Jon Horvath, pleaded guilty to insider trading in September and has been cooperating with the investigations into SAC Capital and its affiliates.
Today’s settlement with SAC includes nearly $275 million in disgorgement, $52 million in interest payments, and another $275 million in penalties. The SEC‘s acting director of enforcement said:
The historic monetary sanctions against CR Intrinsic and its affiliates are sharp warning that the SEC will hold hedge fund advisory firms and their funds accountable when employees break the law to benefit the firm.
Both settlements are subject to the approval of the federal district court.
Filed under: 24/7 Wall St. Wire, business and finance, Law Tagged: DELL, NVDA
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Filed under: Investing
Yahoo! Inc. (NASDAQ: YHOO) workers worry that overly high standards for job candidates set by CEO Marissa Mayer have hurt rebuilding the workforce. (Reuters)
The MGM board may set an initial public offering. (Reuters)
The Securities and Exchange Commission claims the State of Illinois misled investors about its underfunded pensions. (WSJ)
General Motors Co. (NYSE: GM) will change the ad agency for Cadillac. (WSJ)
LinkedIn Corp. (NYSE: LNKD) will buy newspaper app Pulse. (WSJ)
Carl Icahn signs a confidentiality arrangement with Dell Inc. (NASDAQ: DELL) and might push to replace its board. (WSJ)
The White House admonishes China about widespread hacking of U.S. companies. (WSJ)
The Cleveland Clinic sets a partnership with Community Health Systems Inc. (NYSE: CYH) to extend its brand beyond its medical center. (WSJ)
Slow progress on the Keystone XL pipeline prompts U.S. refineries to use trucks to move oil from Canada. (WSJ)
General Electric Co. (NYSE: GE) says CEO Jeff Immelt made $25.8 million last year. (WSJ)
Growth continues to help Costco Wholesale Corp.’s (NASDAQ: COST) gross margins. (WSJ)
The pace of company failures in Italy rises. (NYT)
Regulators in the United Kingdom investigate possible irregularities in the Hewlett-Packard Co. (NYSE: HPQ) takeover of Autonomy. (NYT)
Mexico may establish monopoly laws that would damage the telecom operations of Carlos Slim. (FT)
GE says it plans to double sales in Africa. (FT)
The sale of gold by George Soros shows its long-term bull run may be at an end. (Bloomberg)
Filed under: 24/7 Wall St. Wire, Press Digest Tagged: COST, CYH, DELL, GE, GM, HPQ, LNKD, YHOO
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Billionaire investor Carl Icahn, who is fighting Dell Inc. founder Michael Dell‘s plan to take the struggling company private, has entered a confidentiality agreement that would give him access to the computer maker’s financial records. …read more
Source: FULL ARTICLE at Phys.org
Billionaire investor Carl Icahn wants Dell Inc. to remain a public company and proposed rewarding shareholders with a large dividend payment instead of becoming private in a $24.4 billion buyout. …read more
Source: FULL ARTICLE at Phys.org
Filed under: Investing
We have tracked the key short interest changes as of February 15 in the following large cap stocks: General Electric Co. (NYSE: GE), Nokia Corp. (NYSE: NOK), Bank of America Corp. (NYSE: BAC), Verizon Communications Inc. (NYSE: VZ), Alpha Natural Resources Inc. (NYSE: ANR), McDonald’s Corp. (NYSE: MCD), Apple Inc. (NASDAQ: AAPL), Research in Motion, Microsoft Corp. (NASDAQ: MSFT), Dell Inc. (NASDAQ: DELL), Green Mountain Coffee Roasters Inc. (NASDAQ: GMCR) and Cisco Systems Inc. (NASDAQ: CSCO).
General Electric Co. (NYSE: GE) short interest rose 6.4% to 77.96 million shares. About 0.7% of GE’s float is now short.
Nokia Corp. (NYSE: NOK) saw short interest fall by 2.7% to 330.97 million shares, about 8.8% of the company’s total float.
Bank of America Corp. (NYSE: BAC) short interest rise 10.3% to 166 million shares, which represents 1.5% of the company’s float.
Verizon Communications Inc. (NYSE: VZ) saw a 3.8% rise in short interest to 47.05 million shares, which represents about 1.6% of the firm’s float.
Alpha Natural Resources Inc. (NYSE: ANR) showed a rise of 3.6% in short interest, to 33.13 million shares, about 15.2% of Alpha’s float.
McDonald’s Corp. (NYSE: MCD) showed a rise of 12.5% in short interest, to 13.92 million shares, about 1.4% of the company’s float.
Apple Inc. (NASDAQ: AAPL) saw a short interest fall by 0.4% to 18.78 million shares, or 2% of the company’s float.
Research In Motion changed its name to BlackBerry (NASDAQ: BBRY) on January 30, and short interest for this period was reported under the old name and ticker symbol RIMM. It saw short interest rise by 5.4% to 136.51 million shares, or 27.6% of the total float.
Microsoft Corp. (NASDAQ: MSFT) posted a 4.4% rise in short interest, to 83.58 million shares, about 1.1% of Microsoft’s float.
Dell Inc. (NASDAQ: DELL) short interest fall by 30.1%, to 28.73 million shares or about 2% of the company’s float.
Green Mountain Coffee Roasters Inc. (NASDAQ: GMCR) saw short interest increase by 13.9% to 30.89 million shares or 25.4% of the company’s float.
Cisco Systems Inc. (NASDAQ: CSCO) saw short interest fall by 3% to 55.11 million shares or about 1% of the company’s float.
Short interest in Dell has declined dramatically again following the buyout offer from Michael Dell and his partners. The rise in BlackBerry’s share price has brought more short interest because few people really believe the new smartphones will make much of dent in the armor of Apple, Google Inc. (NASDAQ: GOOG) or Samsung. GE’s rise in short interest is likely due to investors’ belief that the stock is fully valued and prospects are dimming as the global economy continues its slow motion recovery.
Filed under: 24/7 Wall St. Wire, Large Cap Stocks, Short Interest Tagged: AAPL, ANR, BAC, CSCO, DELL, GE, GMCR, GOOG, MCD, MSFT, NOK, RIMM, VZ
Read | Permalink | Email this | Linking Blogs | <a target=_blank href="http://www.dailyfinance.com/2013/02/28/short-interest-wanes-in-some-big-stocks-ge-nok-bac-vz-anr-mcd-aapl-rimm-msft-dell-gmcr-csco/#comments" …read more
Source: FULL ARTICLE at DailyFinance
Filed under: Technology
Hewlett-Packard Co. (NYSE: HPQ) wants back into the tablet market, an effort which the company previously jettisoned under prior misguided leadership. What is so different about this effort here is that the move is coming at a price so cheap that you have to wonder about the profitability metrics.
Its 7-inch tablet is called the Slate 7 and H-P plans to sell it for a low-low price of only $169. Here is where it gets complicated. It is using Android from Google Inc. (NASDAQ: GOOG), but the price is $30 less than the Kindle Fire by Amazon.com Inc. (NASDAQ: AMZN) and the Nexus 7 tablet from Google. It is almost half of the price of the iPad mini from Apple Inc. (NASDAQ: AAPL) at $329 per unit. This looks to be a race to zero on the proposed tablet pricing.
Maybe it is aimed more at unseating the Microsoft Corporation (NASDAQ: MSFT) Surface tablet that starts at about $500. CNET reported earlier that WebOS is being acquired by LG but for televisions rather than for smartphones. Meg Whitman said last week that she wants to take share away from Dell Inc. (NASDAQ: DELL), and Dell Inc. (NASDAQ: DELL) also missed the boat on the tablet market.
It is hard to trust whether or not H-P can adequately make a comeback in the tablet market. Its other efforts cost more than that of Apple, yet the younger generation only wants Apple (or Android) and says that Apple is a far better product. If H-P really wanted this market it should have just stuck with its initial efforts. Oh well, missteps and misdirection from H-P’s leadership at the time.
Maybe H-P should just keep WebOS, the old Palm, and try to get back into the smartphone market too. Or not.
H-P shares closed down 0.7% at $19.07 on the day, but that is a win considering how the DJIA closed down by 216 points or by -1.55%.
Filed under: 24/7 Wall St. Wire, Consumer Electronics, PC Companies, Technology, Technology Companies Tagged: AAPL, DELL, GOOG, HPQ, MSFT
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Filed under: Technology, Mergers & Acquisitions
The results of the Hewlett-Packard Co. (NYSE: HPQ) earnings report come with a very double-edged sword. If you took away all of the pressure from Apple Inc. (NASDAQ: AAPL) in the PC business and took away your knowledge that tablets and smartphones were continuing to plague PC sales, you would look at the valuation and say that Hewlett-Packard looks like the value stock of the century. After you looked at all of the problems after that you might change your mind.
What investors have to take away from the Hewlett-Packard news is one simpleton notion that is not quite so simple in reality. That $13.65 per share proposed buyout price of Dell Inc. (NASDAQ: DELL) sounds like a bottom fishing expedition by founding CEO Michael Dell.
We previously put out a maximum buyout value per share at $15.00 after the buyout rumors resurfaced this time around. If you will recall, there had been prior stories in prior years that Michael Dell was considering a buyout. Then the latest explanation showed that dozens of meetings and discussions had taken place. One investor’s argument is that Dell is worth $24 per share.
Another consideration has to be made here. It is very possible that Michael Dell will not raise his management led buyout by one penny. We threw out a billionaire mindset scenario whereby we speculated that maybe Michael Dell doesn’t really want to acquire the company. His angle may solely be to establish a floor in the price of the stock.
Hewlett-Packard shares were up around $17.90 when we covered the earnings report. At last look we have shares up 7% at $18.30 and that is the highest price going back to September of 2012. H-P is too big in any rational case to acquire on its own due to a $33 billion market cap. It is not too large to try to unlock value here and there.
Michael Dell is paying about 8-times trailing earnings. Hewlett-Packard is currently trading at under 5-times earnings. So what if Michael Dell cannot win a buyout of his PC-maker empire? He might try many ways to unlock shareholder value. We still question whether or not Mr. Dell will really raise his offer for the company higher than the $13.65 per share price that the board agreed to. Shareholders may say also vote against the deal.
Dell shares are up at $13.85 after closing at $13.82 today and the closing bell price is only 1.25% higher than the proposed buyout price.
Is a higher buyout price coming? Maybe.
Filed under: 24/7 Wall St. Wire, Mergers & Acquisitions, Mergers and Buy Outs, PC Companies, Technology, Technology Companies Tagged: AAPL, DELL, HPQ
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SAN FRANCISCO (Reuters) – Hedge fund manager David Einhorn had some sharp words on Thursday for both Dell Inc and founder Michael Dell on his plan to take the company private. Einhorn, who has mounted a campaign to get Apple Inc to share more of its $137 billion cash pile, used the leveraged buyout of Dell as an example of a cash policy that is shareholder unfriendly. Michael Dell has struck a deal to take private the No. 3 personal computer maker he created in a college dorm room in 1984. The founder is partnering with private equity house Silver Lake and Microsoft Corp but the $24. …
SAN FRANCISCO (Reuters) – Hewlett-Packard Co posted a 6 percent drop in fiscal first-quarter revenue of $28.4 billion, but it beat Wall Street expectations in a flat to shrinking personal computing market. Wall Street had on average expected the world's No. 1 PC maker, which like Dell Inc is struggling to sustain sales growth as smartphones and tablets surge in popularity, to record revenue of $27.8 billion in the December quarter. (Reporting by Edwin Chan; Editing by Richard Chang)
By Richard Finger, Contributor
There are currently two very high profile proxy contests circling the airwaves. One pitting Dell Inc. and its oversized CEO Michael Dell against Southeastern Asset Management (Dell’s largest outside investor) and all shareholders in their duel to prevent Mr. Dell from taking the company private at what many believe (including me) at a price that greatly undervalues its assets and cash flow generating capability. The second and more exigent example is TPG-Axon and its leader Dinakar Singh’s attempt to stage a metaphorical coup d’état and throw out the board of SandRidge Energy, thus ending the tyrannical reign of founder and CEO Tom Ward. I penned a story February 11 cataloguing the follies of SandRidge corporate governance practices. TPG-Axon holds 6.7% of SandRidge common shares and together with Mount Kellett Capital Management have over 11% of the vote. This affair carries some urgency as the vote is set for March 15, little more than three weeks hence. This article will examine some of the evidence for why shareholders at both companies need to shed their apathy and protect their financial interests by voting AGAINST management in both of these situations. What do shareholders have a right to expect from management and the board of directors of a publicly traded corporation? Next, I will try to outline why the deck is often stacked against shareholders and describe what it takes to prevail in these struggles to assert shareholder rights. …read more
Source: FULL ARTICLE at Forbes Latest
Filed under: Technology, Earnings
If you believe that Michael Dell‘s proposed management-led buyout of Dell Inc. (NASDAQ: DELL) aims to undervalue the PC and IT player and is a move to take the company private on the cheap, then you better think about today’s earnings. This may be the final or next to last public earnings announcement issued by Dell. While we have no clue how the earnings really did in the most recent quarter, this is a real case where a classic conflict of interest stands out like a sore thumb.
If Michael Dell really wants to stick to a low price, it is in his best financial interest to have Dell report bad earnings. Maybe a couple key corporate or enterprise orders got pushed out. Maybe some expenses got moved forward. There are too many ways that a company can drive earnings (and revenues) in a quarter. It is important to recall that if Dell’s earnings are too strong then you could expect more than just the top two independent institutional shareholders publicly filing with the SEC that the $13.65 per share greatly undervalues the company.
All conspiracy theories aside, Dell is scheduled to report earnings after the close on Tuesday. Dell is expected to post $0.39 per share in earnings (down from $0.51 a year ago) on sales down almost 12% to $14.12 billion. Thomson Reuters shows that Dell had big upside two quarters ago against the estimates, but three of the past four quarterly earnings per share reports have been shy of expectations.
Note that Dell’s share price of $13.79 in late morning trading is above the $13.65 share price. Options traders are only expecting a move of up to about 2% in either direction, but we would caution with Dell trading above the formal buyout price that investors should disregard the options indicator today. Chart analysis is also useless on its own today. Dell shares are trading at $13.79, and the 52-week range is $8.69 to $18.36.
Again, there is no way to know what sort of earnings report will come out today. We just cannot overlook how the conflict of interest stands out as an obvious issue going into this report. Remember, there is $24 billion or so at stake in this deal.
Filed under: 24/7 Wall St. Wire, Earnings, PC Companies, Technology, Technology Companies Tagged: DELL
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Filed under: Technology, Mergers & Acquisitions, Rumors, Industry News
The proposed management-led buyout of Dell Inc. (NASDAQ: DELL) is far from being without controversy. When the deal was still in the rumor stage, we came up with a maximum valuation of $15.00 per share (down to $13.60) for what a buyer would pay and what the shareholders might agree to. With the buyout price currently set at $13.65, it is no shock to us that the top institutional shareholders are effectively fighting the price.
24/7 Wall St. has a different take than what the media reports have been covering. We are not really convinced that Michael Dell really wants to acquire Dell in a management-led buyout. Sure, he wants it. We just think there is a backup plan in the works that is not being reported in the mainstream media.
The size of the deal alone is massive, and repatriating the overseas capital to help pay for the deal will come at a steep price. Our take is that investors need to consider this effort as “The Dell Put!” being the worst case scenario. The best case scenario would be a higher buyout price. Either way, Michael Dell‘s effort here may have ambitions other than what the headline flow and media coverage might have you believe.
So, if Michael Dell is not really interested in taking the company private, the end result is that Mr. Dell is really trying to establish a floor price in the stock. Will that floor be $13.65? Not likely. Maybe Michael Dell thinks that the downside of the deal falling apart is that the stock will not really trade under $12.50 or $13.00 in the future.
To get to this thought, all you have to do is step into the mind of a billionaire whose fortune is largely tied to the share price of a company. That is not just any company, but the share price of a PC-maker. Now that Apple Inc. (NASDAQ: AAPL) has been waging war on Windows-based PCs and winning, and now that Hewlett-Packard Co. (NYSE: HPQ) is in a multiyear disarray, this has to be scary for Mr. Dell. Getting Microsoft Corp. (NASDAQ: MSFT) makes for yet another interesting angle. If this deal falls apart, maybe Michael Dell would still consider including Microsoft as a financial partner ahead. Think about how you would like to be the king of yesteryear’s technology trend that has been passed by.
Our opinion is that the Dell LBO may end up being a very intelligent share price hedging maneuver by Michael Dell. If he does not get to acquire the company outright, he can at least say in a press release, “This deal was deemed today as not being an attractive price for Dell’s shareholders. These shareholders can have the comfort that I have a standing offer at or close to the proposed $13.65 share price, and I am willing to resubmit this offer in the future when the mix of shareholders owns …read more
Source: FULL ARTICLE at DailyFinance
