The takeover bout for Dell resumed on Monday, with investor Carl Icahn sounding off on the proposal from Michael Dell and Silver Lake Partners to change rules governing the shareholder vote for a revised bid to take the PC maker private. …read more
Tag Archives: Silver Lake Partners
Icahn criticizes Dell for vote rule change on proposed deal
The takeover bout for Dell resumed on Monday, with investor Carl Icahn sounding off on the proposal from Michael Dell and Silver Lake Partners to change rules governing the shareholder vote for a revised bid to take the PC maker private.
Company founder Michael Dell and his buyout partner, Silver Lake, last week offered shareholders US$13.75 per share for the company, an increase from the $13.65 proposed in February. As part of the revised offered, the parties proposed a change in the shareholder vote in which only “yes” or “no” votes will be counted, and non-votes or abstentions will not count.
Icahn on Monday urged Dell’s board not to support the proposed shareholder vote change as it could disenfranchise voters.
“The plain and simple fact is that Michael Dell and Silver Lake have underestimated the extent of stockholder opposition to the Michael Dell/Silver Lake transaction and are unwilling to pay fair value to obtain approval of their interested-party freeze-out transaction,” Icahn wrote in a statement.
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Source: FULL ARTICLE at PCWorld
Michael Dell raises buyout offer for Dell by $0.10 per share, with new voting conditions
Michael Dell has raised his offer to take Dell private by US$0.10 per share, to about $24.7 billion, after the company was forced to delay a vote because stockholders seemed inclined to reject the bid.
The new bid of $13.75 per share from Michael Dell and Silver Lake Partners prompted the company to adjourn the special stockholder meeting for a second time while a special committee of the board of directors evaluates the new bid. The meeting will be reconvened at 9 a.m. Central Time on August 2, the special committee said Wednesday.
However, the new bid comes with strings attached: The company must modify the voting requirements for its acceptance, Denali Holding, the acquisition vehicle Michael Dell and Silver Lake are using for their bid, wrote in a letter to the board’s special committee.
Denali wants to modify the merger agreement to require the approval of “a majority of the outstanding shares held by the unaffiliated stockholders that are present in person or by proxy and voting for or against approval of the merger agreement at the stockholder meeting.”
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Source: FULL ARTICLE at PCWorld
Dell shareholder vote to take company private delayed
Dell has delayed a shareholder vote of a proposed buyout deal in which founder Michael Dell and Silver Lake Partners would take the company private.
Dell on Thursday said it adjourned a shareholder meeting to “provide additional time to solicit proxies from Dell stockholders,” and that a special meeting will reconvene on July 24 at 5 p.m. CDT at the company’s campus in Round Rock, Texas.
Michael Dell and Silver Lake in February proposed a deal to buyout Dell for $24.4 billion, or $13.65 per share. The deal includes a $2 billion loan from Microsoft, and debt financing from Bank of America, RBC Capital Markets, Merrill Lynch and Barclays. Dell’s board backed the deal, saying it was the best offer on the table.
But some shareholders came out against proposed deal, believing the company was being undervalued. Some advisory firms recommended shareholders vote for the deal in the wake of a weakening PC market and Dell’s uncertain future. Dell’s business is largely centered around the deteriorating PC business and the company has little to no presence in the growing smartphone and tablet markets.
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Source: FULL ARTICLE at PCWorld
Blackstone abandons offer for Dell
Blackstone Group has given up its bid for Dell, less than a month after the private-equity fund manager said it was planning to top an offer from founder Michael Dell and private-equity firm Silver Lake Partners, according to news reports.
Reports: Blackstone abandons offer for Dell
Blackstone Group has given up its bid for Dell, less than a month after the private-equity fund manager said it was planning to top an offer from founder Michael Dell and private-equity firm Silver Lake Partners, according to news reports.
In the so-called “go-shop” period for alternative bidders to make their offers, Dell received two counter-offers related to its plans to go private, with bids coming in from Blackstone and entities associated with investor Carl Icahn. It is not clear whether Icahn’s bid still continues.
A special committee had concluded that both offers “could reasonably be expected to result in superior proposals, as defined under the terms of the existing merger agreement.” The committee intended to continue negotiations with both Blackstone and Icahn.
But Blackstone’s investors are said to have had reservations on the deal, and had concerns that the stock market had already evaluated Dell fairly, The Financial Times reported, quoting people familiar with the matter.
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From: http://www.pcworld.com/article/2035748/reports-blackstone-abandons-offer-for-dell.html#tk.rss_all
Dell signs agreement to cap Icahn's share ownership
As part of the review process of potential offers to take Dell private, the company announced that its board of directors approved an agreement with Carl Icahn that would cap the amount of shares owned by the activist investor.
CEO Michael Dell and equity firm Silver Lake Partners on Feb. 5 offered to take Dell private for $24.4 billion, or $13.65 per share.
However, counter-offers were made by groups of investors in the 45-day go-shop period during which Dell invited competitive buy-out offers from third parties. A group led by Blackstone offered in excess of $14.25 per share, while Carl Icahn and affiliates offered $15 per share.
Under the agreement, Icahn and affiliated entities “have agreed not to make purchases that would cause them to own more than 10 percent of Dell’s shares,” Dell said in a statement.
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Microsoft Is Totally Killing the PC
By Evan Niu, CFA, The Motley Fool
Filed under: Investing
It’s not an exaggeration to say that the PC market has never been this bad. So much for the “PC-Plus” era that Microsoft has been talking so much about lately; given IDC‘s most recent estimates on PC shipments, maybe “PC-Minus” is more appropriate.
Global PC units in the first quarter got absolutely crushed, falling by 14%. That’s the biggest drop that the market researcher has ever seen in a single quarter in the nearly two decades that it’s been releasing quarterly estimates. That’s almost twice as bad as the already-reduced 7.7% decline IDC was expecting.
There were an estimated 76.3 million PCs shipped in the first quarter, down from 88.6 million units a year ago. IDC makes it very clear that Windows 8 played no small role in the precipitous drop. IDC‘s Bob O’Donnell notes, “At this point, unfortunately, it seems clear that the Windows 8 launch not only failed to provide a positive boost to the PC market, but appears to have slowed the market.”
Source: IDC. YoY = year-over-year.
The new interface may be a bit too much for the average consumer to take in. After all, killing an interface element like the Start Menu that’s been around for 17 years is a big risk. Plenty of Windows 8 users have expressed that they want the Start Menu back, even if that means downloading third-party alternatives.
There’s also a growing perception that Windows 8 needs a touchscreen to be fully enjoyed. That’s only partially true. While the operating system is definitely built around touch interface, it’s also fully compatible with a good old-fashioned mouse and keyboard. Touch-based devices come at a premium price — a price that consumers aren’t willing to pay for a platform with so many trade-offs.
It doesn’t help that the only two domestic PC giants left standing are undergoing identity crises. Hewlett-Packard remains in turmoil, with its chairman just stepping down and continued debate over whether or not the company should be broken up. HP is also actively exploring other platforms from Google; the company has released both a Chromebook and Android tablet this year.
Dell is still trying to scare investors into selling the company back to Michael Dell and Silver Lake Partners. The company’s recent proxy statement lays out the gloomy state of the PC market, a not-so-subtle nudge to get investors to allow the company’s founder to take Dell private. That’s a major change in Dell’s tone, since it used to talk up all its enterprise potential — a discrepancy that Southeastern Asset Management has called out as it opposes the deal.
Chinese vendor Lenovo held up the best with 0% growth, while all other vendors in the top five saw double-digit declines. HP‘s shipments fell 24% to 12 million; Dell shipped 11% less units this quarter at 9 million.
Not even Apple is immune from the downturn. While the Mac maker doesn’t
From: http://www.dailyfinance.com/2013/04/11/microsoft-is-totally-killing-the-pc/
Dell Tries to Pacify a Hungry Icahn
By Michael Lewis, The Motley Fool
Filed under: Investing
Dell has offered its three suitors millions to cover bid expenses, but with caveats. For activist investor Carl Icahn, who is the last suitor and holds the highest bid of more than $15.60 per share, this means he has to be very un-Carl Icahn-like in his proposal. Clearly, the Dell special committee wants this process to go down smoothly, without proxy battles and costly litigation. Where are we with the Dell takeover, and should investors believe Icahn’s estimate that comes in north of $20 per share for the company?
Three houses
As has been widely reported by now, the Dell sale has attracted three bids in its “go shop” period, which concluded at the end of last month. The first player is founder and current CEO Michael Dell, who has partnered with private-equity firm Silver Lake Partners to offer $13.65 per share — valuing the company at $24.4 billion. The stock trades over $14 today.
The second suitor is private-equity group Blackstone. As mentioned in a prior article, Blackstone stepped into the ring with an interesting card — former Hewlett-Packard executive Mark Hurd. The firm believes Hurd, not Dell (the human), could bring Dell (the company) back to relevance as he did with his former employer. Blackstone’s offer came in higher than Michael Dell‘s at $14.25 per share.
The third and final suitor, as mentioned, is Icahn and his holding company, Icahn Enterprises . As usual, Icahn is the wild card in the bunch, vowing to take the company on via proxy fights and lawsuits if he doesn’t get what he wants. Icahn Enterprises currently owns roughly 100 million shares — or more than $1.4 billion worth of Dell stock. He also leads the pack with a bid of $15.65 per share. Before his bid, the investor publicly expressed his opinion that the company is worth more than $22 per share.
What’s a special committee to do?
Pay for play
Dell’s committee is paying all three parties millions of dollars to cover their due diligence — which may seem a little odd, but it sounds to me like they just don’t want to beleaguer the issue. It’s apparently a very peaceful, generous committee.
For Carl Icahn and Icahn Enterprises, the gift package comes in at $25 million. This good gesture came with a note, and one that I can’t imagine reads well on Icahn’s desk.
Specifically, the committee chastised Icahn as having “threatened the Company’s directors with ‘years of litigation’ and a proxy fight if they do not conduct the transaction process in the manner” he prefers. Basically, if Carl Icahn acts like Carl Icahn during this process, he will not be gifted the $25 million, and the committee will be very upset.
Sounds like cannon fodder for the king of corporate raiding.
The word
Looking at the market price, which hovers above Michael Dell‘s offer and below those of the other two, investors and analysts seem to …read more
Source: FULL ARTICLE at DailyFinance
Dow Spotlight Stock of the Week: Hewlett-Packard
By Matt Thalman, The Motley Fool
Filed under: Investing
In 2013, Hewlett-Packard has been the best-performing component of the Dow Jones Industrial Average . Shares are up more than 54%, while the Dow itself has risen by only 11.15%, and its second best-performing component, Travelers , has climbed by just 17.53% in comparison. But this past week gave us HP‘s worst performance so far this year, with a 7.84% drop — its first decline since the week of Feb. 11.
So what happened?
On Monday, one of the company’s top executives, Senior Vice President Ajei Gopal, announced that he’s leaving the company to join Silver Lake Partners — the private-equity group that’s attempting to take Dell private. Gopal will probably play a large role in helping Silver Lake turn Dell around, considering he’s helped in the same capacity at HP. But HP‘s turnaround is far from complete, so this isn’t a move HP shareholders wanted to see.
On Tuesday, Goldman Sachs analyst Bill Shope lowered HP stock from a “neutral” to a “sell,” saying he could see shares falling 31% from Monday’s closing price of $23.31. That means Shope believes that HP shares, which currently sit at $21.97, will drop to $16.09 sometime in the future.
Wednesday brought little news, but shares fell again, probably in reaction to the downgrade. Then Thursday arrived with more drama, as the company announced that Ray Lane will step down as chairman of the board but will retain a seat. Board members John Hammergren and G. Kennedy Thompson also announced that they’ve chosen to resign from their positions.
Shares closed the day up 1.78%, but they resumed their tumble on Friday, falling another 1.48% during the trading session. The seesawing performance of the stock following the announcements indicates to me that shareholders have mixed feelings on the board members’ moves.
During the most recent shareholder meeting, when board members were re-elected, Hammergren and Thompson received only 54% and 55% of the vote, respectively. Lane didn’t do much better at 58%. Typically, board members receive more than 90% of the vote, so it was clear that a large portion of shareholders weren’t happy with the job these members had been doing. Most analysts cite the $11 billion Autonomy purchase, and the subsequent $8 billion writedown, as the source of shareholder discontent.
What now?
The loss of an SVP during a turnaround is definitely a negative. He probably knows what H-P has planned for the future, and now that he’s going to work on behalf of a competitor, he could use that knowledge against HP in some fashion.
The downgrade is also a negative, but much less of one. It’s just one person’s opinion and should be viewed that way. In the short term, the downgrade has already affected the share price and may put further downward pressure on the stock in the coming weeks, but it will ultimately have only short-term effects. A downgrade in no way has any impact on the overall health of …read more
Source: FULL ARTICLE at DailyFinance
Dell Special Committee Addresses Icahn Request for Expense Reimbursement
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
Dell's Takeover Is Good News for Apple
By Alex Dumortier, CFA, The Motley Fool
Filed under: Investing
Today’s was a tough session for stocks, with the S&P 500 falling by a little more than 1%, the index’s largest daily decline in over a month. Meanwhile, the narrower, price-weighted Dow Jones Industrial Average lost roughly three-quarters of a percentage point.
Reflecting those losses, the VIX Index , Wall Street‘s fear gauge, shot up by more than 11% to close above 14. (The VIX is calculated from S&P 500 option prices and reflects investor expectations for stock market volatility over the coming 30 days.)
Reading between the lines
Is Apple the big winner in the ongoing saga of Dell‘s bid to go private? Not exactly. Let’s be clear: Apple is not involved in the transaction. Nevertheless, investment bank Credit Suisse believes the case Dell’s board has made to shareholders in support of Silver Lake Partners and Michael Dell‘s leveraged buyout offer highlights the reasons Apple is superbly positioned to capitalize on consumer trends affecting the technology sector. On March 29, Dell filed a proxy statement calling on shareholders to approve Silver Lake Partners and Michael Dell‘s offer.
In a research piece published on Barron’s website today, Credit Suisse wrote:
We continue to believe that Apple (AAPL) is a beneficiary in the shift to mobile computing highlighted in Dell’s filing. In a multidevice world, we see Apple as materially advantaged compared to peers as the company simultaneously addresses the PC, tablet and smartphone markets.
As such, the broker sees nearly 40% in the shares from today’s closing price:
With strength of iPhone/iPad sales, we see calendar 2013 and 2014 earnings per share of $46.23 and $56.37. We reiterate our $600 price target with the stock remaining our top pick for the next 12 months. Apple trades on 8.0 times our calendar 2014 EPS, which is inexpensive given the 11% growth we expect over calendar 2012-2014 and net cash per share of $145.
Meanwhile, Goldman Sachs‘ enthusiasm for Apple has tempered, as the influential broker removed the stock from its “Conviction Buy” list yesterday and cut its price target by 13%. Apple had been on the list since Dec. 2010. Note, however, that the stock remains a buy, and, at $575, Goldman’s revised price target isn’t much below Credit Suisse‘s $600 target. In fact, the latter figure is the median price target among 46 analysts surveyed by Thomson/ First Call.
With much of our digital and technological lives almost entirely shaped and molded by just a handful of companies, will Apple really be the main beneficiary? Find out “Who Will Win the War Between the 5 Biggest Tech Stocks?” in The Motley Fool’s latest free report, which details the knock-down, drag-out battle being waged by the five kings of tech. Click here to keep reading.
The article Dell’s Takeover Is Good News for Apple originally appeared on Fool.com.
Fool contributor Alex Dumortier, CFA has no position in any stocks mentioned. You …read more
Source: FULL ARTICLE at DailyFinance
Dell's Turnaround Plan Is One Big Gamble
By Adam Levine-Weinberg, The Motley Fool
Filed under: Investing
Troubled PC giant Dell has been embroiled in a months-long battle with shareholders over founder and CEO Michael Dell‘s plan to take the company private (with help from Silver Lake Partners and Microsoft ). Two of Dell’s major shareholders, Southeastern Asset Management and T. Rowe Price, protested that the proposed buyout price of $13.65 was too low. Subsequently, Blackstone Group offered to pay $14.25 per share for Dell, and activist investor Carl Icahn offered to buy 58% of the company for $15 per share.
The recent bidding war has driven the Dell stock price well beyond the original proposed deal price of $13.65. However, last week Dell filed a discouraging proxy statement, which indicated that management expects things to get significantly worse for the company before any potential turnaround. The Special Committee of independent directors that evaluated the rival proposals concluded that the certainty of $13.65 cash from Michael Dell and Silver Lake was superior for shareholders to the Blackstone and Icahn bids, which would leave part of the company trading publicly. With Dell stock still trading at a premium to the Dell/Silver Lake offer — $14.30 as of Monday’s close — it is high time for shareholders to sell and lock in gains.
PC weakness continues
Dell’s big long-term problem is the decline of the PC, which has been cannibalized by the growth of mobile computing (i.e., tablets and even smartphones). The PC replacement cycle has slowed dramatically, pressuring Dell and competitors like Hewlett-Packard . Last year, HP had to write down the value of the Compaq trade name by $1.2 billion due in large part to declining PC sales. Yet the PC business is just a small part of what HP does, representing less than 30% of revenue and less than 10% of segment earnings from operations last quarter.
By contrast, while Dell has been trying to diversify into services, software, networking, and other growth areas, PC sales still represent half of the company’s revenue, and roughly 25%-30% of earnings. As a result, Dell has a lot more to lose from the continuation of weak PC sales than HP. In last week’s proxy filing, Dell stated that uptake of Microsoft’s new Windows 8 has been poor, and enterprise upgrades to Windows 7 PCs have unexpectedly slowed as well. According to a study by Boston Consulting Group (commissioned by Dell), PC division revenue could decline by as much as $10 billion over the next four years.
What’s the solution?
Michael Dell seems to be planning to double down on investments to move the company aggressively into the enterprise hardware, software, and services markets. The investments necessary to execute this transformation will depress profitability for several years. Given the strong competition in those markets from IBM, HP, and others, success is not assured.
It’s hard to fault Michael Dell for taking drastic measures to revitalize the business he founded in his dorm room decades ago. The more moderate transformation strategy …read more
Source: FULL ARTICLE at DailyFinance
Big Tech and Manufacturing Pull the Markets Lower
By Matt Thalman, The Motley Fool
Filed under: Investing
Even though a number over 50 in the Institute for Supply Management’s factory index indicates growth, a decline from the previous month’s reading still means things are slowing down. That’s part of why the major indexes all fell today. The ISM data released this morning showed that the reading for manufacturing production in March fell to 51.3, after hitting 54.2 in February.
That key data point helped push the Dow Jones Industrial Average down 5.69 points, or 0.04%, while the other major indexes performed much worse. The S&P 500 lost 0.45% today, and the Nasdaq fell by 0.87%.
This morning, I discussed a few Dow components that were down on the ISM data, and one technology stock that was moving lower after a downgrade. To read about those stocks, click here. And now, on to the day’s closing data.
Other Dow losers
While the poor manufacturing data surely played some role in Boeing‘s 0.7% drop today, investors may have also been selling because of a Seattle Times report that a 787 test flight was delayed on Saturday. At a time when airlines are canceling flights and leasing planes from Boeing competitors because of the 787 grounding, Boeing needs everything to run smoothly and experience zero delays while it attempts to regain FAA approval for its Dreamliner.
Shares of IBM also ended the day down by 0.43%. To me, IBM often seems to be forgotten about, and perhaps with good reason. Year to date, the stock is up 10.82%, which is slightly below the Dow’s 11.08% gain. Shares also currently trade at a below average price to earnings of just over 14, but the 1.6% dividend yield is lacking other technology stocks, as Cisco has a yield of 2.7%, while Intel boasts a 4.1% yield, and even Apple has a 2.4% dividend yield.
The big tech company is constantly fighting to stay one step ahead of the competition, and the question investors need to ask is: How much fight is left in your father’s favorite stock?
Finally, shares of Hewlett-Packard fell 2.22% today. My Fool colleague John Divine noted earlier today that one of the company’s top executives is leaving to work for Silver Lake Partners, the private equity firm involved in the deal to take Dell private. John thinks that losing a top leader in the middle of a turnaround isn’t what shareholders want to see, and while I must completely agree, I’m not sold on HP‘s turnaround and would by no means touch shares even after today’s decline.
The massive wave of mobile computing has done much to unseat the major players in the PC market, including venerable technology names like Hewlett-Packard. However, HP‘s rapidly shifting its strategy under the new leadership of CEO Meg Whitman. But does this make HP one of the least-appreciated turnaround stories on the market, or is this a minor blip on its road to irrelevance? The Motley Fool’s …read more
Source: FULL ARTICLE at DailyFinance
Tesla Surges Higher as Dow Sputters Along
By John Divine, The Motley Fool
Filed under: Investing
April’s first day of trading got off to a rocky start, as Wall Street showed its lack of enthusiasm for the most recent domestic manufacturing numbers. March’s Institute for Supply Management factory index came in below expectations, nearly showing a contraction in U.S. industry. Despite this, the Dow Jones Industrial Average ended only modestly lower, losing five points, or less than 0.1%, to close at 14,572.
While the Dow traded sideways, some components still saw some pretty wide swings. Health-care providers rose across the board today, and UnitedHealth Group was one of them, adding 3.1% in anticipation of Medicare Advantage rate announcements after the bell. Rising as much as another 3% after hours, investors were pleased with the profit potential the new prices imply for health-care providers like UnitedHealth.
One sector that didn’t have such a bang-up day was technology, and Hewlett-Packard epitomized that sluggishness, falling 2.2%. One of the chip maker’s top executives, Senior Vice President Ajei Gopal, is leaving the company to take a job with Silver Lake Partners, the private equity firm that’s taking Dell private. For a company in the middle of a turnaround, losing valuable members of its leadership team isn’t exactly what you want to see.
Shrugging off the dismal performance in the rest of tech today, shares of BlackBerry rallied 4.6%. The company, despite losing 3 million subscribers in the last quarter alone, recently came out with new software that’s still fresh on the scene in U.S. markets. It also didn’t hurt that a Wells Fargo analyst hiked estimates for BlackBerry sales in the current quarter by a cool 1 million phones.
But even BlackBerry’s rise was no match for Tesla Motors , which rocketed 15.9% higher today as the company confirmed that it will finally turn a profit in the first quarter on better-than-expected sales of its Model S. Some of the run-up was also due to speculation. Tesla founder Elon Musk tweeted last week that there will be a major company announcement on April 2.
The article Tesla Surges Higher as Dow Sputters Along originally appeared on Fool.com.
Fool contributor John Divine has no position in any stocks mentioned.
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The 3 Best-Performing Nasdaq-100 Stocks in the First Quarter
By Sean Williams, The Motley Fool
Filed under: Investing
It was generally a great quarter for U.S. indexes all the way around, with the Dow Jones Industrial Average and S&P 500 all rising to the occasion and eclipsing their all-time highs. The same can’t quite be said for the tech-heavy Nasdaq-100, which rose just 5.9% during the quarter. Don’t get me wrong — this is still an impressive gain. However, the continued commoditization of technology products dragged down results for numerous technology bellwethers.
Despite underperforming both the Dow Jones and S&P 500, three companies shone to the upside during the quarter.
Micron Technology +57.3%
Memory-chip maker Micron sneaked in as the fifth-best performer in the S&P 500, but it snagged the title as top dog within the Nasdaq-100 thanks to the beautiful combination of decreasing production costs and rising gross margins. Micron’s second-quarter results highlighted this outperformance, as its revenue flew by Wall Street’s estimates by $160 million despite a worse-than-expected loss of $0.28 per share.
Celgene +47.7%
Biotechnology company Celgene delivered an exceptional quarter for investors, rising nearly 48% after outlining a plan in early January at the J.P. Morgan Healthcare Conference that could have it doubling its revenue and tripling its profits organically by 2017. Celgene has multiple growth drivers in Revlimed for multiple myeloma and Abraxane, which continues to gain additional approvals in various cancer treatments. In addition, Celgene received FDA approval for its advanced multiple myeloma drug Pomalyst during the first quarter.
Dell +42.2%
PC-maker Dell’s gains come courtesy of a buyout offer to go private from CEO Michael Dell and Silver Lake Partners, which offered $13.65 per share for the company in February. After weeks of huffing and puffing from activist investors unhappy with the buyout price, Blackstone Group and Icahn Enterprises one week ago offered competing bids that could take all, or parts, of the company private for a value ranging from at least $14.25 for Blackstone, to as high as $15 for Icahn Enterprises bid. As a shareholder in Dell, I encourage you to read my more detailed analysis of the three-way battle for this transformative company, and why the Blackstone offer is a superior bid.
Which company has the best shot of outperforming in Q2?
I’m a current shareholder in Dell, but I’m also a realist who understands that the chance that any competing bids will send shares higher is pretty low. With its PC business in decline and its networking business showing double-digit gains, cash flow growth from here on out should remain a wash. That will make raising additional cash beyond the current offers difficult, which leads me to believe Dell will be fairly flat in the upcoming quarter.
Micron Technology, as well, isn’t a company I’d expect much from in the upcoming quarter. Memory-chip makers are the type of company you buy when no one wants them and you sell when the Wall Street upgrades start rolling in. With gross margin expanding …read more
Source: FULL ARTICLE at DailyFinance
Dell: How to Play This Deal
By Alex Dumortier, CFA, The Motley Fool
Filed under: Investing
The summit is only a few steps away! Investors shook off concerns about contagion from Cyprus today, handing the S&P 500 and the narrower, price-weighted Dow Jones Industrial Average a very respectable 0.8% gain. For the S&P 500, this is the 11th time this month the index has closed within 1% of its October 2007 high; surely that “ceiling” can’t resist much longer.
Consistent with those gains, option traders pushed the VIX , Wall Street‘s “fear index,” down 7% to close at 12.77. (The VIX is calculated from S&P 500 option prices and reflects investor expectations for stock market volatility over the coming 30 days.)
Breaking the deal process down
Two new bidders joined the fray in the battle to take PC maker Dell private (or semi-private) over the weekend, and they’re no greenhorns: private-equity giant Blackstone and legendary activist investor Carl Icahn. Let’s be clear from the outset: Neither is a defender of shareholders, per se — they operate with a very narrow yet highly developed sense of self-interest. However, in doing so with regard to Dell, they appear to be creating an attractive arbitrage for public market investors. Here’s where we stand:
- In February, Dell agreed to be acquired by Silverlake Partners and Michael Dell for $13.65 per share. As part of the transaction, Dell’s board opened the process up to competing bidders during a “go-shop” period.
- Blackstone has offered at least $14.25 for the whole company; it’s amenable to having founder Michael Dell and major shareholders roll their stakes over into the acquired company.
- Meanwhile, Icahn is offering $15 for 58% of the company, which would leave an “equity stub” still trading.
A specially appointed committee of Dell’s board will now evaluate the three offers on the table. If they recommend one of the new offers, Silver Lake Partners will have one chance to raise its offer.
How should investors evaluate this situation? Let’s start with a reference price equal to today’s closing share price of $14.50 and think through some of the possible scenarios:
- The board awards the company to Blackstone, and Silverlake declines to raise its offer. Investors face a 2% loss (they receive $14.25 for shares now valued at $14.50).
- The board awards the deal to Icahn, and Silverlake declines to raise its offer. Investors who tender their shares to Icahn earn a 3% return; those who keep their shares face greater uncertainty, but they have Icahn working for them to raise the share price.
- Silverlake Partners wins the contest. Given the opposition of major investors to their initial offer and the presence of competing offers, it’s unlikely that they will walk away with the prize without a sweetened offer that’s higher than Blackstone’s. (We’re comparing like-for-like deals; Icahn’s offer is different.)
- The deal collapses entirely — all bidders ultimately walk away. In this situation, who knows what would happen to the share price, but the interest a Dell sale has generated suggests the shares are undervalued at …read more
Source: FULL ARTICLE at DailyFinance
Dell Shareholders Should Take This Deal
By Sean Williams, The Motley Fool
Filed under: Investing
I’ve always said investing takes a blend of skill and luck. Luck definitely shone in my favor in November when I picked up shares of PC-maker Dell the day after it reported third-quarter results that had Wall Street running for the hills.
In that report, investors saw a company that was in the midst of a very long transformation that was going to struggle with declining PC-sales as it pushed into information technology. What I saw was a company capable of producing billions in annual cash flow that already boasted a large net cash position, and that could be a potential takeover target. Little did I know how lucky I would be, because a few months later that takeover chatter would become a reality.
Three’s company
The initial deal offered by Silver Lake Partners for $13.65 per share didn’t sit too well with Dell’s largest shareholders — Southeastern Asset Management and T. Rowe Price Group , which together own 12.9% of all outstanding shares — and prompted activist investor Carl Icahn to make a sizable investment that led to the confidential opening of Dell’s books. Large shareholders criticized the deal for valuing Dell too cheaply with Icahn originally demanding Dell go into debt to pay out a $9 special dividend if the deal fell through. That all changed on Friday.
With three bids effectively on the table now — $13.65 from Silver Lake Partners, a minimum $14.25 per share offer from Blackstone Group , and an offer from Carl Icahn and Icahn Enterprises to purchase 58% of outstanding shares at $15 — things are about to get interesting. When all is said and done, one deal stands out to me, a Dell shareholder, as a clear winner.
Why the Silver Lake deal is yesterday’s news
The Silver Lake deal is essentially dead after these two competing bids emerged on Friday. Unless Silver Lake wishes to boost its bid — which could be more difficult now that Dell lowered its fiscal profit down to $3 billion for the year — or Michael Dell wants to dig more deeply into his own pockets (which seems very unlikely given that he was already utilizing his 16% stake in the company to finance the deal), then it’s as good as dead.
I think Icahn? Actually, I think not…
Carl Icahn‘s deal is intriguing from a shareholder perspective as it, on paper, appears to net the highest dollar amount per share, although we don’t yet know how high the Blackstone Group bid is willing to go. However, Carl Icahn‘s bid will only be for 58% of the company, exposing the remaining 42% to the public effects of a reduced earnings forecast and a discerning public eye that has been displeased with the pace of Dell’s turnaround.
This is the deal that makes sense
As a Dell shareholder, the Blackstone offer makes the most sense of all — and I feel …read more
Source: FULL ARTICLE at DailyFinance
Dell Receives Bids From Icahn and Blackstone
By Evan Niu, CFA, CFA, The Motley Fool
Filed under: Investing
PC giant Dell has received two acquisition proposals to rival the original buyout proposal from Michael Dell and funds affiliated with Silver Lake Partners.
The new proposals were elicited during the “go-shop” period included in the merger agreement, and a special committee of the board has determined that both proposals could potentially be superior. The committee intends to continue negotiations with both.
Carl Icahn is proposing to take Dell private at a price of $15 per share, while Blackstone is offering $14.25 per share. Both proposals are higher than the $13.65-per-share transaction proposed by Michael Dell in February. The structure of each offer differs, making the decision more complicated than simply accepting the highest per-share offer.
The special committee has included detailed proposals of both new offers in a press release.
The article Dell Receives Bids From Icahn and Blackstone originally appeared on Fool.com.
Fool contributor Evan Niu, CFA, has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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Read | Permalink | Email this | Linking Blogs …read more
Source: FULL ARTICLE at DailyFinance
Blackstone proposes counterbid for Dell, reports say
Blackstone Group has reportedly sent a preliminary counterbid to buy out Dell, which would rival the current proposed offer of US$24.4 billion from Silver Lake Partners and Michael Dell made in early February. …read more
Source: FULL ARTICLE at Computerworld Latest