Thursday, May 23, 2013

There is a Huge Battle Over Control of Dell

Can Anyone Tell Us Why?

Michael Dell built the company named after him into a personal computer Goliath.  Now Mr. Dell wants to take the company private, to buy out the shareholders leaving himself and some partners as owners.  The shareholders are not happy, thinking that Mr. Dell is dealing himself a great deal at their expense.

Icahn and a major stakeholder, Southeastern Asset Management, say Michael Dell’s deal is too cheap for a company trying to challenge I.B.M. and Hewlett-Packard in enterprise computing. They are proposing new leadership and additional cash or stock for shareholders.

Not so fast.  A major part of Dell’s business is personal computers, you know, the ones nobody is buying any more.

Dell, the subject of a takeover battle between the activist investor Carl Icahn and the company’s billionaire founder, reported a 79 percent slide in profit as personal computer sales continued to shrink.

Now let’s see what is happening here.  Michael Dell is in the process of running the company into the ground.  The company is in a dying industry, PC’s.  Michael Dell wants to take complete control of the company, presumably so he can finish the job of running it into the ground.  So why

  1. Do the existing shareholders want to hang on?


  1. Why do Mr. Dell’s partners want to put up billions so he can have even more control of the company he is failing?

Imponderables both.

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