Dell just isn't worth this much
I figured Michael Dell for hubris -- but I did not figure the marketplace for ignorance.
The alternate universe is sometimes too hard to comprehend. I can't figure out which is right -- the public market or the private one -- because both can't be right at the same time.
That's really the Dell (DELL) deal in a nutshell. Dell is a company in secular decline. It has bought a series of companies, a move meant to make it more of a consultant with hardware vs. a pure personal-computer name. However, the strategy has not brought the company the profitable growth it thought it would get. Margins? Down. Cash flow from operations? Down. Earnings? Down. Revenue? Down.
Plus, let's face it: Dell's doesn't have social, mobile or cloud. It's just a 1990s company that has been trying to fight back for ages, using the parts that everyone else has -- Microsoft (MSFT) software and Intel (INTC) processors and whatever drives are cheapest at the moment. There is very little value added, even despite CEO Michael Dell's endless attempts to make it much more of a service company than a hardware company. The vertical in which he has had the most success is government, and that's a terrible thing to be leveraged to. Universities, too -- again, not so hot. Plus, big European exposure. No thanks. (Microsoft owns and publishes Top Stocks, an MSN Money site.)
So when the stock kept going down and down and down, it just seemed like a perma-short, except for that nice balance sheet that could be used to make more acquisitions in order to try slowly repositioning the company.
We all know Michael Dell had talked about taking his company private if it got too low, and I guess $8 per share was too low. But beauty is in the eye of the beholder, and I figured only Michael Dell would seriously entertain the notion that his company would be beautiful to many -- which is why there was no way this thing was going back to the mid-teens on its own.
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I figured him for hubris. I figured him for arrogance. But I did not figure the marketplace for ignorance. The stock was correctly priced, given what is happening, at under $10 a share.
So now Dell makes the bid and, incredibly, two others smart, deep-pocketed people want in? To me this just seems insane. It's as if they just hate Michael Dell and are determined to have him pay up for this own company. Surely they don't mean to actually buy it, do they?
Which brings me back to the original question: How can this company, which was worth about $14 billion in the public market, be worth $26 billion in the private market? How in the heck does anyone think the public market could have been valuing this stock that incorrectly? How does anyone think there is that much more value to be had by taking the stock private? Does Dell have some sort of new machine that can run on water? Solar? Does it have a cellphone killer? Does it have the next great device that will change our lives?
Here's what I think. I think we will look back on this one and say the winner was the one who didn't get Dell -- because to get Dell at these prices is to risk losing everything.
I've see this happen a couple of times in my career, when it had been obvious that everyone had lost their sense -- most recently with the Tribune buyout. I know that, theoretically, all three smart teams shouldn't be wrong. But the company's just not worth what they are paying, unless they can fire everyone and still make the same revenue and profit.
That's about what it will take. And that ain't happening.
Jim Cramer is a co-founder of TheStreet and contributes daily market commentary to the financial news network's sites. Follow his trades for Action Alerts PLUS, which Cramer co-manages as a charitable trust and has no positions in stocks mentioned.
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Well I didn't win the PB.......So I'm still here....But I can speak and comment in English.
Good luck to the guy and family that won it....I hope they do all the right things with their winnings.
With Spring and Summer moving, I'm losing interest real fast with several of the articles.
There's just too many...And many repeat "similar stories" about the "same companies" by a different author, about every week to 10 days.
How many Articles about Apple, do we need in 10 days?....How many stories about Cyprus on the website? A couple stories a month are plenty about the FED or Job numbers.
It just gets boring with repetition after awhile.. IMO.
Well I think it was a great day, after yesterday...No matter where we drifted...
New Record on the DOW....And S&P record of 1565.15 (set in 2007) within "spittin' distance..!!!
I think that is, all pretty good...!! wahooooo!!
"but I did not figure the marketplace for ignorance"
Bobo......... this is like the pot calling the kettle black.
I personally NOTICED a nice drifting to the PLUS Triple digits, which look like Aces...Reminds me of a "good hand" you know where....?....Fri. lost about $50...Sun. won about $600..
So far for the year up about $1150-$1225.00 give or take, plus tips of about $125-175...Always treat them right.
doda...Golf game...Yeah seen some guys playing, but this Winter has brutal...Probably be playing in a few weeks....I like it over 70* degrees; Big problem with one-eye, affecting golf game and drives.
ABS not really "retiring completely", just not going to be commenting as much...No reason left.
Still be around, watching to make sure "no one is telling Bold Face lies"...You know, try to keep the youngins on a straight and narrow path...This isn't the first time I took a sabbatical from HERE.
Last time was back several years after I first retired...
I am looking at about 10,000 comments as the cut-off....Maybe 10,001 ??
Then occassionally come by/ in and say hi...
Like you I have, big lawn and big garden to maintain, Miss Lilly likes to mow.
Also have a hired hand, helping do some remodel, staining, painting and maybe work around the Barns or sheds..?
He keeps me real busy...Because, I have to maintain the whips or Cattle prods.
And then going today into the City to pick up buildings materials..Things like that.
Along with Golf, Casinos....I plan on getting back into more fishing this year..
That's gonna keep me busy along with, screwing around on Wall St. and trades...
So I plan on being busier this year and cutting back here, but still come and check Markets, because this isn't too bad of a Site...For information and Watchlists..
The MTDs were made on the East Coast...or S. Eastern/ Mid States.
Not sure now, but plenty of parts for any of them...
Kohler, Briggs or Tecumseh Engines.
Ahhh, LAWN Tractors....if you come back, ABS...?
Sounds like you need at least a 46-50" Cut....And at least 20+ hp...
I would recommend a Twin-Cyl...20-23hp..Gas only.Trans axle or drive. 3 cutting blades(smoother).
Yeah Deere makes a good mower, but on high end of price range for that size..
And Huskies, Craftsman same thing....Accessories are pricey for all...They get you on those.
I have experience with some or close friends with them.
Consider an MTD, big one like that usually about $1500-2000
Take a look at TSC..stores; Tractor Supply Store...pretty good prices and they are easy to work with.
If there is one near you ??...They are in 45 States...
I have had about 3-4 MTDs....Last big one is what we use most, it's 14 years old.
Only had to replace steering knuckle; Cable slipped down and messed up teeth(Miss Lilly)
Caught on fire once (Miss Lilly), but after I changed oil and filters..She looked like a meteorite coming across yard at full tilt, I had to repair/replace some of the wiring...
Barn fell on it (God)...I straightend out sheet metal and some hingeing..No major parts broke.
Put innertubes in front tires, after getting small leakes.
Nothing else, but I do maintain it....46" cut, 20 or 20.5 hp twin..14 years.
I would try and make them throw in a lawn cart/trailer too, or at half price...Good luck.
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