WASHINGTON, February 5, 2013 – Although we’ve been reading about the preliminaries for weeks, we’ve learned this morning that cheap PC maker Dell has inked a “final” $24.4B agreement to be taken private by an investment consortium led by company founder and current CEO Michael Dell himself. Dell obviously feels that he and his fellow investors can right the sinking company on their own, although only time will tell.
Witnessing this kabuki theater dance of the one-percenters is proving to be a delightful exercise in schadenfreude for the Maven. His elephant-like memory for smart-ass remarks deliciously recalls Michael Dell’s smug dismissal of then-floundering Apple back in 1997. That was the year Steve Jobs and his patented Reality Distortion Field staged a stunning back office coup, stepping back in after nearly 15 years to take over the reins of his once and future company.
“When asked what he’d do with Apple if he were in Jobs’ shoes,” back then, notes BusinessInsider, Michael Dell, then riding high on the sales of his cheaper-than-dirt PCs, replied, “What would I do? I’d shut it down and give the money back to the shareholders.” Looks like it’s time to consign Dell’s textbook wallowing in the tar pits of hubris to the “famous last words” dustbin of corporate history. Pride do certainly goeth before the fall, n’est-ce pas?
Not surprisingly, the volatile Jobs was not much amused by Dell’s helpful hints, according to BusinessInsider, “reportedly telling Apple employees at the time, “F— Michael Dell.” Sounds like Jobs, who always did have a way with the English language when PO’d. We also wouldn’t be surprised if, on another level, Dell’s smarmy condescension gave yet another boost to the seething creativity, vision, and foresight that drove Jobs to entirely re-invent the very basis of personal computing.
That’s something that Dell, via his last-ditch action today, is finally beginning to confront. We wonder, though—aside from the modest take-out premium current Dell stockholders might get if the deal goes through—whether those unloved shareholders, who’ve been taking a bath on Dell stock for years, will be happy with the results. The takeout price is said to be $13.65 cashola per share in this deal which will allow Dell and a consortium of investors, including Silver Lake Partners and Microsoft, to take the company private. The transaction is said to be the biggest leveraged buyout since Great Depression II erupted in full force.
Reports indicate that Dell (the company) can and will entertain other bids so as to be “fair” to existing shareholders. But the fine print in the deal adds a fair deal of fiscal punishment to the balance sheet of any potentially successful bidder, so we’d be surprised if any actually show up. In any event, they now have 45 days to see if they want to be taken to the cleaners for ponying up the big bucks and penalties to acquire a floundering business whose best days are likely behind it.
In this decadent era, perhaps the last decaying decade of late-stage capitalism—during which corporate bigwigs and tenured-in politicians alike have enjoyed swaggering into a roomful of lesser mortals while spraying the perfume of excess testosterone in their wake—we’d once again like to draw everyone’s attention to the nearly inevitable results of hubris. Hubris marks that rare but exhilarating Ozymandias moment when one of the Elect stands on the ornate balcony of his lavish palace, tall and proud like an immense puffer pigeon, haughtily surveying his vast domain, proclaiming to the thronging and awestruck multitudes that he and he alone is the Master of the Universe. Such moments incur the wrath of the gods, who will eventually bring down those who attempt to compete with them. Michael Dell now knows how this works.
(Speaking of Masters of the Universe, here’s one of them, portrayed by Tom Hanks in the eponymous 1990 film based on Tom Wolfe’s novel of contemporary Wall Street, Bonfire of the Vanities. Note, BTW, that Mommy is none other than pre-Sex In the City Kim Cattrell, while her precious daughter is the pre-Spiderman Kirsten Dunst. Just like the Maven attempts to do, Hanks tries to explain a bit of Wall Street arcana. But Momma does it better.)
Dell’s smartass 1997 assessment of Apple ultimately set both he and his company on an inevitable hubristic journey that culminated in this morning’s announcements. That should be a lesson to business bigwigs and self-important political hacks everywhere. But, alas, it likely won’t be. Our consolation? All this makes for pretty good reality TV, without any need for PR hype. Ask Bernie Madoff about this. Meanwhile, we wonder how Michael Dell likes them apples.
Oh yes, the markets are open today and Wall Street’s Wheel of Fortune has spun another full turn. Yesterday’s desolation, which undid Friday’s irrational exuberance, is itself in the process of being undone today, with the Dow up circa 110 points around noon today while the S&P moves over the magic 1500 threshold. Life is good again on February 5 until it isn’t, and dip buyers are back in droves after yesterday’s unpleasantries.
We continue to sell single positions here and there as the occasion warrants, as we can’t get away from worrying about Fiscal Cliff: Act II, scheduled to commence on March 1 or whenever, depending on whether Congress, like their European gurus, kick that can down the road once again.
Boise Cascade comes public (again) tonight (proposed symbol BCC) after a weird dalliance disguised as Office Max (OMX). (Look it up if you’re interested. It’s a long story.) We may scoop up a few shares on the offer as we’ve had pretty good luck lately with nearly every one we’ve gotten hold of. But we still can’t figure out if this re-hatched forest products company, dependent as it is on a continuing homebuilding recovery, will be a good intermediate-term ride. Best info on offers like this one tends to be found in the excellent free site Seeking Alpha. But the Alphas don’t really have a lot to say about Boise Cascade, so we’re kind of on our own.
Enjoy the likely bullish ride today. But beware of that one bit of nasty news that will almost certainly send the markets tumbling at some point this month. Though it could even be short-lived, such a fall will cause chaos and panic, further damaging what, if any trust the public may still have in our securities markets.
Disclaimer: The author of this column maintains several active trading and investment portfolios and owns residential and investment real estate.
Any positions mentioned above describe this author’s own investment decisions and should not be construed as either buy or sell recommendations. The current market is highly treacherous and all investors travel at their own risk, so caution should be exercised at all times.
Illustrations, charts, commentary, and analysis are only the author’s view of current or historical market activity and don’t constitute a recommendation to buy or sell any security or contract. Views, indications, and analysis aren’t necessarily predictive of any future market or government action. Rather they indicate the author’s opinion as to a range of possibilities that may occur going forward.
References to other reporters, analysts, pundits, or commentators are illustrative only and do not necessarily represent an endorsement of such individuals’ points of view. If specific investment vehicles are mentioned in any ar500ticle under this column heading, the author will always fully disclose any active or contemplated investments in said vehicles.
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