Keep calm and carry on flogging: Dell soothes troops as buyout looms While IT, finance and private-equity barons plot the fate of tech giant Dell, its employees have to get on with making, selling and supporting the company's myriad products. And in the past month, they have had to field a lot of questions from customers asking about the proposed $24.4bn leveraged buyout deal that company …
Well, they aren't going to Flog anything to me, as long as they inisist it MUST have W8 on it. If ever there was an opportunity to make money from thier flirtations with Ubuntu, this was it, but all they are offering is one miserable 'developers' workstation.
Blinkered, narrow minded, idiots. Or completely enthralled to the evil empire.
Buggerm, in either case.
I'm confused. Both of these minority shareholders are advocating BORROWING money to pay out as dividend? Aside from that been a bit bonkers (and assuming Dell has the distributable profits to do it), what sane lender is going to pony up several billion dollars to just see the cash immediately vanish out of the company? It's hard enough getting a mortgage with a property as collateral at the moment. Yes, Dell probably has lots of unencumbered assets on it's books but given the way PC reselling is going at the moment, it'll probably need them.
"Both of these minority shareholders are advocating BORROWING money to pay out as dividend? "
Because they argue that as a corporation Dell should fund more of itself by debt rather than equity, and note that it is a proposed "special dividend", so what that really means is a one off return of "surplus" cash to shareholders. And you say "what sane lender..." but it's not that unusal to return cash to shareholders whilst increasing a company's borrowings.
As a general rule you wouldn't want companies you own hoarding cash, you'd rather have it returned to you to invest elsewhere (because if the company earn a higher return on capital than the cost of borrowing, you'd be better off). In this case it's less clear because Dell already have (by sector standards) a fair pile of debt. The "give me my cash" argument works a lot better if you're talking about companies like Apple, sitting Smaug-like on a huge pile of cash that is (by rights) due to investors, and having no debt.
Personally I don't give a hoot either way. I wouldn't buy or recommend a Dell computer, and I wouldn't invest in them either, so all I see here is a dispute between megabuck investors over how they think they should share the pie. I'm sure the people who finally pay the price will be Dell's employees, as the new owner seeks to cane the organisation for cash.
Yeah, it raises the question of who the "shareholders" are in a company. Every company says they are trying to do their best for their shareholders. In this case, and many others, these activist investors could care less if Dell is around in five years. They bought it, they want to empty the coffers and saddle them with debt for a one time massive payout, and then they are gone again. Long term shareholders/investors vs. short term shareholders/speculators. The speculators usually win.
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