Dell going private in megabucks deal

[Rico]

I'm not so sure about this - $24 billion to leverage and take Dell back private?  WOW!

Michael Dell will take computer company Dell Inc private in a $24.4 billion deal that marks the biggest leveraged buyout since the financial crisis.

The company's founder and CEO, and private equity firm Silver Lake are paying $13.65 per share in cash for the world's No. 3 computer maker.

The deal is being financed by cash and equity from Michael Dell, cash from Silver Lake, cash from Michael Dell's MSD Capital investment firm, a $2 billion loan from Microsoft Corp and debt financing from Bank of America Merrill Lynch, Barclays, Credit Suisse and RBC Capital Markets.

The parties expect the transaction to close before the end of the second quarter of Dell's fiscal 2014.

News of the buyout talks first emerged on January 14, although they reportedly started in the latter part of 2012. Michael Dell had previously acknowledged thinking about going private as far back as 2010.

The $13.65-per-share price is a premium of about 24 percent to the average $11 price of Dell stock before news of the deal talks broke and is far below the $17.61 that the shares were trading for a year ago....

http://www.reuters.com/article/2013/02/05/us-dell-buyout-idUSBRE9140NF20130205

[Bryancd]

It's a good move. Dell as a public company is dead money. They need to restructure the company free of shareholder obligation and recreate Dell in the model of IBM and HPQ. They need to diversify their business out of PC sales and into servicing.

[Rico]

I always find it interesting how the stock market seems so far removed from how well a company is really doing.  Apple has more money (and maybe loyal fans) around than anyone, yet their stock price has plummeted.  Dell decided to not do a phone or get into mobile much.  Their bread & butter is still in the corporate computer world.  I'm just confused as to how this makes them generate more profit and sales.

[Bryancd]

The problem for Dell is how to grow a mature business. It's the law of large numbers. There PC's are so ubiquitous, they pretty much sold as many as they could and now just survive on upgrades. So year over year, they have very little revenue growth relying soley on that model. By going private, they can do a complete overhaul on the focus of their business. The PC market is stagnant and likely in a long term decline. Dell needs to respond to that free of having to report to shareholders.
Apple's stock, or any companies stock, is a future discounting mechanism. The value of the shares is based on the companies future preceievd gwoth rate. Apple still trades at a premium based on current earning in the anticipation of future growth, but that multiple has been lowered as they too start to encounter the issues of being a more mature company with proiducts that are in a lot of hands. Variability on the stock price is a reflection of the speculation as to future products and markets they can capture.

[X]

The problem for Dell is how to grow a mature business. It's the law of large numbers. There PC's are so ubiquitous, they pretty much sold as many as they could and now just survive on upgrades. So year over year, they have very little revenue growth relying soley on that model. By going private, they can do a complete overhaul on the focus of their business. The PC market is stagnant and likely in a long term decline. Dell needs to respond to that free of having to report to shareholders.
Apple's stock, or any companies stock, is a future discounting mechanism. The value of the shares is based on the companies future preceievd gwoth rate. Apple still trades at a premium based on current earning in the anticipation of future growth, but that multiple has been lowered as they too start to encounter the issues of being a more mature company with proiducts that are in a lot of hands. Variability on the stock price is a reflection of the speculation as to future products and markets they can capture.

Yeah, what he said... So are you still strong on Apple or has a new tech jewel caught your eye?

[Bryancd]

The problem for Dell is how to grow a mature business. It's the law of large numbers. There PC's are so ubiquitous, they pretty much sold as many as they could and now just survive on upgrades. So year over year, they have very little revenue growth relying soley on that model. By going private, they can do a complete overhaul on the focus of their business. The PC market is stagnant and likely in a long term decline. Dell needs to respond to that free of having to report to shareholders.
Apple's stock, or any companies stock, is a future discounting mechanism. The value of the shares is based on the companies future preceievd gwoth rate. Apple still trades at a premium based on current earning in the anticipation of future growth, but that multiple has been lowered as they too start to encounter the issues of being a more mature company with proiducts that are in a lot of hands. Variability on the stock price is a reflection of the speculation as to future products and markets they can capture.

Yeah, what he said... So are you still strong on Apple or has a new tech jewel caught your eye?

I think Apple at $450 is fairly priced for the moment. I own it higher and bought a little here, but it's going to have to be a "show me" story. My best stocks over the last few months have been Netflix which i bought really cheap, Rim before the new Blackberry roll out, and....Disney post LucasFilm aquisiation! I also really like Qualcomm. The following are not recomendations to buy, your results may vary. :)