Times have been tough on Dell. They are finally making the move from public to private. So what does this mean to shareholders? Well, it depends on when you bought it...
It is a tough reality to face if you invested with long term value in mind. Shareholders are accustomed to selling when they want to, not being forced out by a company going private. Nevertheless, I think it is the right business decision. The system of mandated quarterly earnings reports corrupted corporate America. While it provides shareholders with an update on how the company is performing, they are improperly tweaked far too often to maintain stability within the markets. Dell was definitely feeling this pressure. Now that they will be private they can focus on the company and its future, as opposed to the satisfaction of its shareholders.
The transition of moving from a company that provides computers to one that deals with business services can be stressful for stock holders. They constantly want to see profits, but while trying to change the future of the company, Dell cannot always provide these profits. This move is good for both shareholders and the company because now the company can look internally, and the shareholders won't have to worry about the change in focus.
ReplyDeleteThis is very interesting. I had no idea Dell was a public company to begin with. This is definitely a move out of desperation I believe. Dell has been struggling to keep up with Apple's innovations and have been falling behind. I remember the early 2000's when Dell was the standard and everybody had a Dell computer in their household. I am curious to see how shareholder's will react to this change from public to private. I wonder if investors will dump their stock to cut their losses or if they will hold on and see possible improvements. Only time will tell.
ReplyDeleteThis is a very interesting article. I agree that this decision was a smart one for Dell to make. As Jason Lonnemann put perfectly, it will be a worthwhile, beneficial decision for both the company and the shareholders. It is a very risky choice to make to sell Dell's PC portion of the company, but IBM's decision outcome makes Dell's new track look promising and for the better. However, they are two different companies. A layman would never associate Dell with being a sole business service company. They have always been known for their computers. Of course it is possible for the change to work over time, but eliminating the PC side of the company, what the name "Dell" is associated with all over the world, and what has been its claim to fame, I don't think is a good idea. I doubt we will see, if they get rid of their computer line, the same results as in IBM. It was also a different time when IBM did their shift. This could be indicating Dell's decline and crash in the future. It will be interesting to see if the New Dell and their new ideas are strong enough to keep the company going and recover it. Even if they do, I think it is quite obvious that it will not be as comfortable as it was before.
ReplyDeleteI think Dell going private is a way for them to adapt to changing times. Like Matthew said "I remember the early 2000's when Dell was the standard and everybody had a Dell computer in their household" and now Dell is stuck in the shadow that is Apple. Dell moving to private gives them the ability to focus on their products. They need new innovations that can keep them up to step with Apple. Clearly Dell was not where they wanted to be before this move so I am interested to see if this improves the company.
ReplyDeleteDell is struggling because of "alternative mobile computing devices", otherwise known as the iPad. With about 4 or 5 iPad generations out, Dell's customers are now moving towards these alternative devices because people want something mobile and more versatile. Good news for Dell is that they are still leading Apple in overall computer sales because the majority of the world still uses PCs instead of Macs. However, when it comes to overall net worth, Apple is worth about 18 times what Dell is. I don't see the rest of the world switching to Macs anytime soon so Dell will still enjoy profits, but, in America at least, long gone are the days when Dell was superior to Apple.
ReplyDeleteI think it would be great for Dell to invest heavy capital into the research and development of more quality software. I think that is where many of these companies need to focus when there is such tough competition such as Apple and Samsung. Dell can succeed, they just need to follow a realistic path.
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