Dell to go private?

[ultimatebob]

What I wanna know is what Microsoft got for their 2 billion dollar investment.

Should we be expecting a Dell branded Surface 2 any day now?

 

[CPA]

Man, you are really bad at figuring out how capitalism really works.

lol

So you agree that companies have lost their way and only care about short-term gains, caring only for the shareholder, have lost focus of the customer, yet you make a thread about the wonders of Amazon, a company that uses low margins, invests long-term and has great customer service. Guess what, Amazon doesn't do all of those things out the goodness of their heart, they do it because they know it drives value to their shareholders.

Do all companies do this efficiently? No, but that has nothing do with with being a public company. Private or Public companies fail all the time because they lack vision, understanding your markets/customers, wrong product delivery, etc. And the weeding out of those companies is capitalism in action. Don't produce for your shareholders by doing what's necessary in the long-term, then you'll suffer. Companies know this and they work on it, whether you see it or not.

 

[CPA]

The problem is that corporations start thinking one quarter at the time. Increasing share price at all and any cost. Long term goals become just a nice wish list.

I agree to an extent. But to think that companies do not have long-term goals is not correct. If you've ever been a part of a process improvement, you know that that is a long-term goal.

 

[BladeVenom]

What I wanna know is what Microsoft got for their 2 billion dollar investment.

Probably to keep them from going with Android and Chromebook.

 

[DesiPower]

What I wanna know is what Microsoft got for their 2 billion dollar investment.

Should we be expecting a Dell branded Surface 2 any day now?

PC shipped with Windows 8 Mouse!!!

 

[Puppies04]

Sorry, I don't get this. In order to placate shareholders, a company needs to have good EPS, among other things. In order to have a good EPS, a company must focus on products and customers.

Depends on what type of shareholders you have, if they are long term people than you are correct but many people want short term returns and dividends and don't care if it hurts the company in the long run as they can cut and run while looking for the next sucker to place their money in.

 

[BoberFett]

Hmm, this could be interesting. They just bought Wyse and Sonicwall, two vendors that I like. And Dell is great for business machines. Hmm...

This is exactly their problem, they keep buying up everything they can and then they don't seem to know how to do anything with it once it's bought.

This and this.

My company is heavily invested in Dell. Desktops and laptops, servers, switches, WYSE terminals, SonicWALL, Boomi. Our Dell sales reps love us, we're a model customer: wall-to-wall Dell products. Seems like a lot of the companies that we were already using products from got swallowed up by Dell over the past several years and they ended up being our one-stop shop. Some of the products have been less than stellar. We've generally gotten good support, particularly on the SonicWALL side, but it's frustrating that some of the problems we've had make it past QA.

Wonder if they'll start divesting some of those acquisitions now and become more focused?

 

[Phokus]

lol

So you agree that companies have lost their way and only care about short-term gains, caring only for the shareholder, have lost focus of the customer, yet you make a thread about the wonders of Amazon, a company that uses low margins, invests long-term and has great customer service. Guess what, Amazon doesn't do all of those things out the goodness of their heart, they do it because they know it drives value to their shareholders.

Do all companies do this efficiently? No, but that has nothing do with with being a public company. Private or Public companies fail all the time because they lack vision, understanding your markets/customers, wrong product delivery, etc. And the weeding out of those companies is capitalism in action. Don't produce for your shareholders by doing what's necessary in the long-term, then you'll suffer. Companies know this and they work on it, whether you see it or not.

Just because one company, Amazon, focuses on the long term strategy doesn't mean it's not true that most publicly traded companies act like this.

You also don't know what the word 'outlier' means.

Bezos has done an amazing job training shareholders to be obedient little dogs (rather than the other way around, typically), but that's not the norm.

The incentives are aligned for most CEO's to take short term risks, especially when shit like this happens

Would i rather see 200 million now and let the company burn to the ground or a billion years down the line? Hell, if i'm a CEO, i have the board in my back pocket, i might even be the CHAIRMAN of the board. Obviously, i'd have a favorable contract with bad incentives.

I'm not surprised that someone like Bezos would care though, he created the company and he's been there forever. Other CEO's just rise through the ranks because they're good politicians, but they weren't the ones who founded the company and they just care about their own payday.

 

[Wreckem]

This and this.

My company is heavily invested in Dell. Desktops and laptops, servers, switches, WYSE terminals, SonicWALL, Boomi. Our Dell sales reps love us, we're a model customer: wall-to-wall Dell products. Seems like a lot of the companies that we were already using products from got swallowed up by Dell over the past several years and they ended up being our one-stop shop. Some of the products have been less than stellar. We've generally gotten good support, particularly on the SonicWALL side, but it's frustrating that some of the problems we've had make it past QA.

Wonder if they'll start divesting some of those acquisitions now and become more focused?

I think the goal is to solely focus on the Corporate Market, including Corporate Services. They are wanting to emulate IBM. If anything is sounds like they are going to double down on the above.

 

[BoberFett]

I think the goal is to solely focus on the Corporate Market, including Corporate Services. They are wanting to emulate IBM. If anything is sounds like they are going to double down on the above.

So they're going to raise prices on products and focus on selling consulting services?

 

[BladeVenom]

IBM spends a lot of money on R&D. Doesn't IBM still produce more patents every year than anyone else? I think they produced more patents in a year than Dell has in their entire history.

 

[Phoenix86]

I agree to an extent. But to think that companies do not have long-term goals is not correct. If you've ever been a part of a process improvement, you know that that is a long-term goal.

They do, but short term will often override long term goals. Often to the point of stupidity.

Take a look at the average company with declining shares. I have been in the middle of this at two companies and watched them flush long term goals down the toilet to save share prices, quarterly. Those two companies do not exist in the same matter they did prior to the changes and never achieved their long term goals. Now, they have new long term goals, but a stable share price.

 

[BoberFett]

IBM spends a lot of money on R&D. Doesn't IBM still produce more patents every year than anyone else? I think they produced more patents in a year than Dell has in their entire history.

My reply was somewhat tongue in cheek, yes IBM does still do a lot of R&D.

Dell will happily sell you a server and that's the end of the transaction.

Microsoft will sell you an RDBMS and send you on your merry way.

IBM will sell you both of those things, but what they really want to sell you a team of expensive consultants.

 

[Mani]

Just because one company, Amazon, focuses on the long term strategy doesn't mean it's not true that most publicly traded companies act like this.

You also don't know what the word 'outlier' means.

Bezos has done an amazing job training shareholders to be obedient little dogs (rather than the other way around, typically), but that's not the norm.

The incentives are aligned for most CEO's to take short term risks, especially when shit like this happens

Would i rather see 200 million now and let the company burn to the ground or a billion years down the line? Hell, if i'm a CEO, i have the board in my back pocket, i might even be the CHAIRMAN of the board. Obviously, i'd have a favorable contract with bad incentives.

I'm not surprised that someone like Bezos would care though, he created the company and he's been there forever. Other CEO's just rise through the ranks because they're good politicians, but they weren't the ones who founded the company and they just care about their own payday.

You get it. It's quite rare to find public companies who truly focus on the long term. Largely a case of misaligned incentives, and as executive compensation continues to rise, it will just continue.

 

[GTaudiophile]

I wonder if this will set of a trend of sorts.

 

[Phokus]

You get it. It's quite rare to find public companies who truly focus on the long term. Largely a case of misaligned incentives, and as executive compensation continues to rise, it will just continue.

A redditor had dinner with Andy Fastow, former CEO of Enron and he had an interesting comment about this:

http://www.reddit.com/r/finance/comments/17yc4g/had_dinner_with_andy_fastow_heres_my_experience/

In general, he loved his time at Enron. He said that he felt like the master of the universe during his work. He always felt like something was wrong, but he knew it wasn’t illegal, so it was okay. He mentioned that there are clearly issues in the Enron culture, where financial incentives were tied directly towards financial results. He also mentioned that Enron suffered the “public company problem,” where the company is driven towards short term results instead of long term growth. He implied that if he worked for a private company instead of a public company, he probably would’ve created strong long term growth.

He said that his mistake was that he never asked him “is it ethical?” Instead, he asked only “will this make money?” or “will the numbers be good?” He mentioned that the “snowball effect” is very dangerous, where Enron entered the slippery slope of bad financial behavior.