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Dell Supposedly In LBO Talks, Stock Soars

Tyler Durden's picture


Moments ago Bloomberg broke news that $19 billion market cap Dell may be in talks to go public. The result was a 10% surge in the stock that halted the stock as a circuit was triggered. Of course, there was a headline caveat that "LBO TALKS MAY NOT LEAD TO A DEAL." Which is not improbable: at $19 billion market cap, the equity check would be substantial for any consortium of buyers, not to mention the debt. Then again this must be the New Normal LBO announcement, where PE firms "leak" news of a going private deal just so they get to pay an even higher 20% premium to a closing stock price.  But the truly hilarious part is that the entire multi-trillion market jumped as if stung following the news. And that is what passes for efficient markets these days. Unless, of course, the "here come the LBOs" thesis is now in play.

And the full article from Bloomberg, based on "two people with knowledge of the matter" - who? Icahn and Tilson? And did any two "people" who may or may not communicate with both themselves, and Bloomberg reports, buy a substantial amount of ATM/OTM calls in the past few days in Dell?

Dell Inc. (DELL), the personal-computer maker that lost almost a third of its value last year, is in buyout talks with private-equity firms, two people with knowledge of the matter said.


Round Rock, Texas-based Dell is discussing going private with at least two firms, said one of the people, who declined to be identified because the talks are private. The discussions are preliminary and could fall apart because the firms may not be able to line up the needed financing or resolve how to exit the investment in the future, the people said.


Several large banks have been contacted about financing an offer, one of the people said.


Chief Executive Officer Michael Dell has been using acquisitions to help the company he founded sell more computers and services to businesses. Dell is struggling to regain share in the PC market as consumers switch to tablets, including Apple Inc.’s iPad, and smartphones such as the handsets that use Google Inc.’s Android software.


CEO Dell owns 15.7 percent of the company, making it easier for firms to put together equity financing for the deal, one of the people said.


Goldman Sachs Group Inc. upgraded the stock to buy in December, saying that Dell’s net cash balance presents an opportunity for a leveraged buyout.


While demand for PCs has declined, Dell’s net cash balance of $5.15 billion provides “some downside buffer as it produces opportunity for an LBO or levered recap under the right conditions,” Bill Shope, an analyst at Goldman Sachs, wrote in the report. “Dell has become an attractive deep value play and we would be buyers of the stock.”


Michael Dell, who retook the CEO position in 2007, said in 2010 he had considered taking the company private.


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Mon, 01/14/2013 - 15:13 | 3151660 HedgeAccordingly
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In other news. RIMM job is soaring. 

Mon, 01/14/2013 - 15:18 | 3151689 NoDebt
NoDebt's picture

So's HPQ.

AAPL.... sorry, no cake for you.

Mon, 01/14/2013 - 15:28 | 3151740 Silver Bug
Silver Bug's picture

Now that is Vertical!

Mon, 01/14/2013 - 15:14 | 3151664 AccreditedEYE
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What a surprise, we are on the highs... nothing says Bull Market like dead tech, bitchez.

Mon, 01/14/2013 - 15:14 | 3151666 naiverealist
naiverealist's picture

Check your lead.  The headline says g private, but the firsst sentence says go public.

Mon, 01/14/2013 - 15:14 | 3151669 hedgeless_horseman
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When assessing price, remember that the C is PC now stands for Commodity.

Mon, 01/14/2013 - 15:24 | 3151705 NotApplicable
NotApplicable's picture

I was thinking it stands for Probably China.

Anybody know how to say "Dude, you're getting Dell" in Mandarin?

Mon, 01/14/2013 - 15:19 | 3151678 CaptainSpaulding
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Dell makes a fine product. I have bought Dell computers since the 90's. I NEVER had a problem with them.

Mon, 01/14/2013 - 15:37 | 3151772 michiganmaven
michiganmaven's picture

wow surprised by the negative votes on this one.. you did not say DELL was a good company or well run.. just it made a good computer... which I agree with but Dell is nothing more than an assembler of parts... they do not make really any components... so its more credit to intel, amd, nvidia, asus, ibm, etc... but still...

Mon, 01/14/2013 - 15:49 | 3151808 hannah
hannah's picture

dells own employees HATE dell pc/laptops.

Mon, 01/14/2013 - 17:30 | 3152139 aerojet
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I've used them for years in the corprate world--with a few exceptions, they are superb computers and have never let me down.  I'm typing from one right now.  The only problems I have ever had will Dells were the hinges on some of the laptops.  IBM is a close 2nd, but their laptops had issues for a few years there.  Lenovo seems to have sorted out its quality problems.

Mon, 01/14/2013 - 16:09 | 3151856 CPL
CPL's picture

I like their gear as well.


Latitude D series, tough laptops and very hackable with the extra wiggle room in the laptop case.  610 and 620 (Dual Core).  Batteries were build well.

Inspirion 9400/6400, tanks, easy to rebuild and fix, extensible desktop replacement.  heavy and tough chassis.  Mines been rolling for a while.  Well worth the cost retail and the three year warranty if you abuse the CPU and video in them by doing things you shouldn't.

Dell Mini's, only laptop designed by dell as a "fuck you" to apple.  You can install MacOS on it from a 15 buck OS disk, put it on a USB key and install it.  Hackintosh at 1/5th the price of the MacBook Pro (over priced, mid tier, laptop with lousy support)

Their servers, ummm, they've gotten better.  But if you own a young company and you need gear at a reasonable price with a SOLID warranty.  Dell sells some nice mid range gear.


Dell did bomb on the Inspirion 1525 series though.  Great insides, piece of shit case design.  Cheap and flimsy for the market price.  

Inspirion 1570 series...they could have spend more on the keyboard, it fails the "aquickbrownfoxjumpedquicklyoverthefence" test.   Battery is great in it, video is passable, peppy and runs cool.

Mon, 01/14/2013 - 16:11 | 3151874 Chump
Chump's picture

Same story here.  When we decided to get a new laptop it was Dell all the way, no question.

Mon, 01/14/2013 - 22:42 | 3152960 Lost My Shorts
Lost My Shorts's picture

I bought two Dell rack-mount 1U servers, one in 2003 and one in 2005.  Dell offered the best price for the specs I needed, and both are still humming with never a colmplaint.  My heart sinks at the thought of an LBO -- the private equity owners will stripmine and trash the company the way they always do, and the products will turn to plastic junk.  I guess no more hardware; cloud from now on.

Mon, 01/14/2013 - 15:16 | 3151679 SmoothCoolSmoke
SmoothCoolSmoke's picture

Why any succesful entrepenuer takes his business public is beyond me.  Having to kiss WS's ass on a daily basis ain't worth the money IMO.

Mon, 01/14/2013 - 15:18 | 3151692 gjp
gjp's picture

From washed up 'value plays' like DELL and RIMM to decidedly un-value plays like AMZN and CRM, it's all working.  Basically, Ben's got your back.  Whatever the news of the day is, it is just coincidental noise.

Mon, 01/14/2013 - 15:20 | 3151699 SheepDog-One
SheepDog-One's picture

Up a buck. Clownbuck, that is.

Mon, 01/14/2013 - 15:20 | 3151700 gatorengineer
gatorengineer's picture

Lets see Dell Laptops are flying off the shelves... Windows 8 Desktops, well not so much..... but they have phones.... Ah no..... I think they have announced a Windows 8 Tablet (OOPs DOA)....


Lets see Crapple to $200 or Dell to $4 which comes first?  (Hint both will happen this year).....

Mon, 01/14/2013 - 15:20 | 3151703 astoriajoe
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I didn't realize they were still in business.

Mon, 01/14/2013 - 15:21 | 3151704 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Good, now the corporation is only down 25% YoY.

Mon, 01/14/2013 - 15:22 | 3151708 Cursive
Cursive's picture

Bull Thesis:  Stocks are dramatically undervalued!  Wall of worry!  Stock prices don't reflect actual value!  Money on the sidelines is rushing to take these "cheap" companies private!  Buy, buy, buy!  /sarc

Mon, 01/14/2013 - 15:49 | 3151807 Mr Lennon Hendrix
Mr Lennon Hendrix's picture

You forgot....

Investors are muppets and will believe anything GS tells them!

Mon, 01/14/2013 - 15:24 | 3151711 q99x2
q99x2's picture

PC sales are down. This is Earth is it not? Three dimensions plus time and all that.

Is that the same DELL that went public in the 90s? Where have I been? What a strange post.

Oh "private." I get it.

Mon, 01/14/2013 - 15:25 | 3151716 fuu
fuu's picture

Why would anyone buy a Dell, much less all of Dell?

Mon, 01/14/2013 - 15:26 | 3151727 hedgeless_horseman
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Exactly...especially when you can get a Gateway Computer.  I just love all their billboards with the cows.

Mon, 01/14/2013 - 15:32 | 3151756 fuu
fuu's picture

Or Newegg, Microcenter, etc.

Mon, 01/14/2013 - 15:26 | 3151729 NotApplicable
NotApplicable's picture

Dollar repatriation?

Or viewed differently, "The People's Republic of Round Rock?"

Mon, 01/14/2013 - 15:24 | 3151720 billwilson
billwilson's picture

Efficient markets ... what a quaint quaint concept. 

Mon, 01/14/2013 - 15:24 | 3151722 Agent P
Agent P's picture


(What ever happened to that guy?)

Mon, 01/14/2013 - 15:28 | 3151738 NotApplicable
NotApplicable's picture

Busted for the evil-weed, last I saw.

Only Apple is allowed to have stoners for PR.

Mon, 01/14/2013 - 15:25 | 3151726 billwilson
billwilson's picture

61 million shares short, almost 5% of float ... nice game

Mon, 01/14/2013 - 15:27 | 3151733 CvlDobd
CvlDobd's picture

I'm unemployed now. I think I'm gonna buy a new 'puter!

Mon, 01/14/2013 - 15:29 | 3151742 juicyfruit
juicyfruit's picture

probably desperation before going bankrupt

Mon, 01/14/2013 - 15:33 | 3151758 LongSoupLine
LongSoupLine's picture

When honesty doesn't raise stocks, swing a fucking rumor.

Fuck you wall street.

Mon, 01/14/2013 - 15:33 | 3151759 billwilson
billwilson's picture

Beautifully timed .... the monkeys are good.

Mon, 01/14/2013 - 15:34 | 3151762 tawse57
tawse57's picture

Sounds like desperation to me to try and prop the price up before any results due.

Their Windows 8 tablet laptop hybrid is embarassing to look at. Dells seem very expensive IMPO.

Mon, 01/14/2013 - 15:35 | 3151766 AccreditedEYE
AccreditedEYE's picture

Isn't Dell kinda like Atari circa 2000?

Mon, 01/14/2013 - 15:37 | 3151774 Say What Again
Say What Again's picture

That chart looks like a profile shot of me this morning. 

Mon, 01/14/2013 - 15:38 | 3151776 Smuckers
Smuckers's picture

Maybe you'll get a box of free Twinkies when you buy a new Inspiron.


Mon, 01/14/2013 - 15:42 | 3151786 Seasmoke
Seasmoke's picture

go public ????.......private ????.......ahhhh, whats the difference

Mon, 01/14/2013 - 15:45 | 3151795 IridiumRebel
IridiumRebel's picture

Buy that shit you fuckin fux!

Mon, 01/14/2013 - 15:44 | 3151796 jubber
jubber's picture

Just as Apple was about to go through $500 funny that

Mon, 01/14/2013 - 15:45 | 3151797 GFORCE
GFORCE's picture

Tilson was short!

Mon, 01/14/2013 - 15:50 | 3151814 hannah
hannah's picture

the fed and the primary banks are realllllly pumping these trashed stocks for the last 4mths.

Mon, 01/14/2013 - 15:54 | 3151824 buzzsaw99
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does this mean the pension funds will get back all their money? /sarc.

Mon, 01/14/2013 - 15:56 | 3151830 Everybodys All ...
Everybodys All American's picture

anything to juice the NASDAQ.


Mon, 01/14/2013 - 15:59 | 3151839 sethstorm
sethstorm's picture

Opaqueness can't fix a company that insists on screwing over its customers - especially with their reputation for bad offshore tech support and low-quality products.

Mon, 01/14/2013 - 16:04 | 3151852 robertocarlos
robertocarlos's picture

I bought a Dell once.

Mon, 01/14/2013 - 16:04 | 3151854 hannah
hannah's picture

too funny how we get a pop...straight to overhead resistance. and people say that T/A doesnt work...LOL!

Mon, 01/14/2013 - 16:21 | 3151896 adr
adr's picture

Dell should go private and we should force every other fucking waste of space with a stock ticker to do the same. You say you run a successful profitable business, prove it by running the thing without the Wall Street con. Dell could once again focus on building products instead of satisfying stock traders using iPhones.

Mon, 01/14/2013 - 16:36 | 3151927 NeedleDickTheBu...
NeedleDickTheBugFucker's picture

Looks like an AAPL going private rumor is in order with the stock flirting with the sub-$500 level.  No problem sourcing the $100 billion of equity financing - just get every hedge fund on the planet to roll their shares.

Mon, 01/14/2013 - 17:14 | 3152077 ZackAttack
ZackAttack's picture

LBO is just another place to surrender from if the PC market continues its present trend. Right now, it looks like history is about to repeat itself, with the smaller, simpler device replacing the larger, more complex one. Minis did it to mainframes, the PC did it to minis, now the phone and tablet are doing it to PCs. 

Mon, 01/14/2013 - 17:25 | 3152118 TooBearish
TooBearish's picture


Mon, 01/14/2013 - 17:37 | 3152167 aerojet
aerojet's picture

I don't see how corporate people who do things like write code or create graphics are going to manage with a phone and a tablet.  Just sayin'...

Mon, 01/14/2013 - 17:57 | 3152229 tenpanhandle
tenpanhandle's picture

I agree.  I couldn't get along with these micro devices in fact I do not even own one.  I need to leave the computer and get away on a daily basis, not carry one around in my pocket, or more realistically, two inches in front of my face like so many millions carry theirs around.  My phone is small but it is about 5 years old, has no computer-like functions.  It is for calling only.

Try dealing with maps, diagrams and spreadsheets on those 3 inch screens.  Also, try seeing the real world all around you with a three inch screen always in front of your face.  Silly.  Just check into the Matrix already.

Mon, 01/14/2013 - 17:34 | 3152151 rodocostarica
rodocostarica's picture

I don't get it. A computer.... Any computer is a box with power supply. A mother board, A cpu, memory, hard drive, and then whatever combo of DVDs,  cards for hookups,  programs etc.  Buy all this from a local reseller and make your own. Why pay extra for name brand? Dell is history.

Will be interesting when someone makes this happen with smart cell phones. Now that would be an idea. Snap together an Iphone 8 with $150.00 of components.

get on it!!


Mon, 01/14/2013 - 17:37 | 3152163 aerojet
aerojet's picture

Because if you are a corporation, the last thing you want to do is have a bunch of IT guys whose job it is to build computers.  It's a nightmare and not core to your business.  Sure, if your company has like 10 employees, have at it, but if you employ hundreds or thousands of people?  You would be insane to try and do better than Dell or IBM.

Mon, 01/14/2013 - 17:36 | 3152159 aerojet
aerojet's picture

What a scam--taking public companies private.  The anti-IPO.  These are truly odd times we live in.

Mon, 01/14/2013 - 20:12 | 3152597 Mediocritas
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The correlated movement of individual listings only gets more and more ridiculous by the year. The correlations respect no fundamentals and no borders with one little piece of news able to move every stock in every market all over the world in the blink of an eye. Dark times.

One Bank to rule them all,
One ETF to find them,
One Algo to bring them all,
And in the darkness bind them.

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