Dell Inc. and the PC industry’s innovation crisis
By Chris Sorensen - Tuesday, February 19, 2013 - 0 Comments
Caught trying to mimic the latest hot product, the most powerful tech firms can’t seem to dream up anything genuinely new
Tony Avelar/Getty Images
It’s a sure sign a company is in desperate straits when journalists go searching for answers from a former pitchman. In a recent interview with Bloomberg, Ben Curtis, the actor who played the “Dell dude” in computer-maker Dell Inc.’s 2000-era commercials (in which he would inform strangers “Dude, you’re getting a Dell”), suggested his troubled former employer could get a sorely needed boost if his character were resurrected. “Since that campaign ended, Dell has lost their personality,” Curtis said, adding that he, too, now uses an Apple Inc.-made laptop.
Dell’s problems won’t be so easily fixed. In a bid to speed up a badly needed transition from hardware manufacturer to provider of high-margin software and services, founder and CEO Michael Dell and private equity firm Silver Lake Partners are proposing a massive $24.4-billion leveraged buyout of Round Rock, a Texas-based company that once held the title of the world’s largest maker of personal computers. It’s just another reminder of how fast the technology industry moves. One day a company is the most powerful in Silicon Valley, with a soaring stock price; the next it’s contemplating moving away from the very business that made it a household name. (In Dell’s case, its outstanding shares, once worth nearly $60, are being purchased by its founder and Silver Lake for $13.65 apiece.)
Although desktop and laptops remain ubiquitous in homes, offices and schools, sales of PCs have slumped in recent years as consumers increasingly use smartphones and tablets. Worldwide PC shipments totalled 90 million units during the last three months of 2012, according to Gartner Research, a 4.9 per cent decline from the same period a year earlier. In Canada, the fall was even steeper—down nearly 14 per cent. “We’re approaching a saturation point in the market,” says Tim Brunt, an analyst at consulting firm IDC Canada. “There are multiple PCs in every household. Everybody’s got one, so now it’s just about buying replacements.”
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T. Rowe Price joins shareholder rebellion against Dell’s proposed $24.4 billion sale to CEO
By The Associated Press - Tuesday, February 12, 2013 at 9:25 PM - 0 Comments
SAN FRANCISCO – A shareholder rebellion against Dell’s proposed $24.4 billion sale to its…
SAN FRANCISCO – A shareholder rebellion against Dell’s proposed $24.4 billion sale to its founder and other investors is gaining more support, fueling a belief that the struggling personal computer maker will have to wrangle a higher price to get the deal done.
Mutual fund firm T. Rowe Price joined the opposition Tuesday. T. Rowe Price and another shareholder, Southeastern Asset Management, believe that founder and CEO Michael Dell and the investment firm Silver Lake are being allowed to seize control and end Dell Inc.’s 25-year history as a publicly held company for too little money.
“We believe the proposed buyout does not reflect the value of Dell, and we do not intend to support the offer as put forward,” T. Rowe Price Chairman Brian Rogers said in a statement.
Baltimore-based T. Rowe Price Group Inc. and Southeastern are the two largest independent shareholders and own nearly 13 per cent of the company combined. Michael Dell has committed his 14 per cent stake toward the deal, but he is the only investor to own more stock than either of the two.
Although Dell remains one of the world’s largest technology companies, with about $57 billion in annual revenue, it has become less attractive to investors as smartphones and tablet computers siphon sales away from PCs. To make matters worse, Dell has been losing market share to its rivals. The company once was the world’s largest PC maker, but now ranks third behind Hewlett-Packard Co. and Lenovo Group.
Michael Dell believes it will be easier to accelerate Dell’s expansion into more lucrative areas such as technology consulting and business software if the company doesn’t have to cater to Wall Street’s fixation on whether profits are rising from one quarter to the next.
The company, which is based in Round Rock, Texas, said it remains convinced that it is selling at a fair price, which represents a 25 per cent premium from where the stock stood before word of the buyout negotiations leaked last month. During the talks, Dell’s board said it also considered a wide range of other alternatives. The proposed price of $13.65 is more than 40 per cent below Dell’s stock price of roughly $24 six years ago when Dell returned for a second stint as CEO.
Southeastern, which came out against the proposed deal last week, argues that Dell is worth $23.72 per share, or about $42 billion. T. Rowe Price didn’t provide an estimate of what it believes Dell is worth.
It’s still unclear how other large Dell shareholders feel about the deal, but the opinions of Southeastern and T. Rowe Price seem likely to embolden others to join the resistance. Southeastern owns an 8.4 per cent stake in Dell, according to a Tuesday regulatory filing that revised the size of its stake from 8.5 per cent in documents submitted last week. T. Rowe Price owns a 4.4 per cent stake in Dell, according to FactSet.
Michael Dell is contributing his holdings to the proposed sale, along with cash that will bring his total financial commitment to about $4.5 billion. The rest of the proposed deal’s financing is being provided by Silver Lake and loans from Microsoft Corp. and an array of banks.
In a Tuesday research note, Jefferies analyst Peter Misek predicted the current offer will have to be sweetened to $15 per share, or nearly $27 billion, to placate riled shareholders.
Dell’s stock is now trading above the current offer, a sign that more investors are becoming convinced the bid will be raised. Dells shares gained 9 cents to close at $13.79 Tuesday.
The door remains open for another suitor to emerge. Dell said it will accept other bids until late March.
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A brush with sexism at Dell Inc.
By Emma Teitel - Monday, May 28, 2012 at 1:21 PM - 0 Comments
It isn’t the first time that the PC firm has had a PC problem
American tech giant Dell Inc. delivered a belated public apology last week for hiring a famously sexist Danish celebrity named Mads Christensen to speak at one of its corporate conferences in April. “The IT business is one of the last frontiers that manages to keep women out,” Christensen joked to the roughly 800 Dell partners and employees (including CEO Michael Dell) at the Copenhagen conference, adding: “The quota of women to men in your business is sound and healthy.” According to Danish blogger Christiane Vejlo, who happened to be one of the women in the room, Christensen also suggested that the men in the audience go home and tell the women in their lives to “shut up, bitches.” Vejlo went home and wrote about the remarks on her blog, which remained under the radar until Reddit.com got hold of the English translation last week. This isn’t Dell’s first brush with sexism: in 2009 it paid $9 million to settle a gender bias lawsuit filed by two former female employees, and raised the ire of female techies everywhere when it launched a marketing campaign based on the assumption that women primarily use laptops to record their calorie intake and browse online for recipes. Sounds like something Mr. Christensen would say.
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Good for businesss: Corporate Social Responsibility report 2010
By macleans.ca - Monday, June 14, 2010 at 9:00 AM - 3 Comments
Our second annual survey of companies in Canada that prove it pays to have a conscience
For many successful companies, corporate social responsibility (CSR) is no longer just a boardroom buzzword, but a key to business. So, for the second year in a row, Maclean’s has partnered with Jantzi-Sustainalytics, a global leader in sustainability analysis, to present the country’s Top 50 Socially Responsible Corporations.
While the reasons each company was selected vary—from Gildan Activewear donating more than half a million dollars to Haitian relief efforts, to Loblaw’s commitment to acquiring all of its seafood from sustainable sources by 2013, to Nike making World Cup jerseys for nine national teams out of bottles found in landfills—the underlying goal is the same: make the world a better place. As well as the Top 50 list, which begins on page 42, we look into how CSR might help with major PR problems, like BP’s oil spill, and whether the recession made the business world any less socially responsible.
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Top 50 Socially Responsible Corporations
By macleans.ca - Monday, June 14, 2010 at 9:00 AM - 28 Comments
These companies have made doing good a big part of their business
Click on a company name for more details:
Adidas Group
Ballard Power Systems Inc.
BCE Inc.
BMO Bank of Montreal
BMW
Brookfield Properties Corp.
Cascades Inc.
Catalyst Paper
CIBC
Dell Inc.
Direct Energy
Enbridge Inc.
Gap Inc.
General Mills Inc.
Gildan Activewear Inc.
H.J. Heinz Company
Honda
Hewlett-Packard Company
HSBC
IBM Corp.
ING Group
Intel Corp.
JPMorgan Chase & Co.
Kinross Gold Corp.
Loblaw Companies Ltd.
L’Oreal
Manulife Financial.
McDonald’s Corp.
Nexen Inc. .
Nike Inc.
Nokia
Oracle Corp.
Puma
RBC
Rio Tinto-Alcan
Scotiabank
Sony Corp.
Stantec Inc.
Starbucks Corp.
State Street Corp.
Sun Life Financial
Suncor Energy Inc.
Talisman Energy Inc.
TELUS Corp,
TD Bank Financial Group
TransAlta Corp.
Transcontinental Inc.
Volkswagen
Westport Innovations Inc.
Xerox Corp.For the related article and methodology, The Jantzi-Maclean’s Corporate Social Responsibility Report 2010 click here.
