Back in 2008, Michael Dell and I sat for a chinwag at company headquarters in Round Rock, Texas Even during the darkest economic times (DELL) Dell situation was worse than many of its rivals. The company does not seem to have any response to changing market conditions around. And Michael Dell, the famous entrepreneur, did not appreciate me pointing that out. He grimaced and bristled and gave me the silent treatment for what was to be a one-hour interview that lasted about 30 minutes. Dell sucks air from the room with his discontent.
In the years since then, Dell has spent billions of dollars buying services, additional services, and even more of them, along with software and hardware companies. This is all part of a grand strategy to become a unique technology and service shop for small and medium enterprises that IBM (IBM), Hewlett-Packard (HPQ), Oracle (ORCL) and Accenture (ACN) don’t seem to want to bother. Last year, the strategy was good enough for Dell to post revenue of $ 62.1 billion and net income of $ 3.5 million, while cash flow reports of transactions around $ 1.5 billion per quarter.
When you look at the figures, it is clear that Dell’s financial situation is not serious. The problem has been that investors see little upside in the company’s PC business is still huge and seems to have zero faith that Michael Dell has another important idea in it. In the past 10 years, investors have pushed down the shares of Dell and never have done even more aggressive since Michael Dell returned as CEO in 2007.
Add all these factors, and becomes very clear why Michael Dell, Silver Lake and Microsoft (MSFT) moved to take the company private on Tuesday. Dell was destined to face additional years of scrutiny that the company tried to expand its biggest gain in software and services companies. While this may be a sound strategy, it takes a long time to run and certainly does not seem revolutionary. Dell basically bought the IBM business plan and made some minor alterations. Michael Dell may be one of the richest of the most successful people this country has fostered, but those achievements should do little to soothe his ego when people ask, again and again and again why the company has seemed so damn inept in areas such as smartphones and tablets and … well, anything interesting.
The worst scenario for Michael Dell would have happened if a shareholder activist had gotten into the mix. Dell have faced the prospect of being expelled from the company that bears his name. I’m sure this is why Dell was privatized. Dell, Silver Lake and Microsoft acquires a company that pumps enough money to keep all parties happy, while Michael Dell is protected from being reprimanded by analysts, investors and media. Best of all, he stays with his company.
At 47, Dell is still a young man and maybe has another act that remained. A spectacular return to public markets, however, would require a new idea that is as good as selling configurable client computers at a low cost, low. Michael Dell has been looking for an idea for five years, with little luck.