Dell Said To Be In Buyout Talks With Private-Equity Firms 150
puddingebola writes "Dell Inc. is reported to be in buyout talks with private equity firms. From the story, '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.'"
stocks surging! (Score:1)
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Fixed that for you:
Lots of news trading algorithms just decided it's a done deal. Well played Dell.. well played
Dude... (Score:2, Funny)
...you're getting a Dell!
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Shouldn't that be
Dude, you're getting Dell!
whats that sound (Score:3, Funny)
I Hear a cackling that sounds a lot like Steve jobs.
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Actually from a business perspective, buying Dell might not be a bad idea... basically doing a reverse of what dell did to Alienware... buy it and actually improve the brand, support and image...
Just the support would do. Dell still has a huge following in businesses, same with HP simply because they were both geared to provide massive deliveries (try asking Apple to deliver 500 PC's per week for 8 weeks built to your specifications... oh and the first delivery is next week. They'll laugh at you, Dell wont). Apart from that, HP is shite, Dell used to be OK but is heading to shite.
Dell just has to up it's support offerings and decrease the failure rate.
Dells best bet would be to kill the expe
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does dell offer linux on it's blade servers? if not, that could be an area they can improve on... if they can pull their head out of microsoft's asshole
Dell offers Linux on most of their servers. IIRC blades are included. But most people tend to buy their blades sans OS, even MS shops as they are covered by a Enterprise Agreement. That being said, Windows 8 has got to be hurting them.
Finally (Score:3)
Dude! (Score:4, Funny)
Dude... you're getting redundant!
taking Dell's own advice (Score:5, Funny)
First they give the money back to the shareholders, then they shut the company down.
The money doesn't matter. (Score:2)
Re: taking Dell's own advice (Score:2)
Apple doesn't split their stock. Apple's market cap is huge and I respect that but you're comparing apples to oranges. If you remove Apple's successful line up of i-items Dell is comparable if not a tad more profitable.
But really, who cares? Alienware still has wonderful equipment and Dell has a huge business game. Even now as Apple sells to the BMW crowd Dell is still dominant in the business world. In the end Apple will sell based on fashion and image, Dell on sheer volume.
Why keep it going? (Score:5, Funny)
I'd shut it down and give the money back to the shareholders.
Re:Why keep it going? (Score:5, Informative)
October 6, 1997:
"And at the Gartner Symposium and ITxpo97 here today, the CEO of competitor Dell Computer added his voice to the chorus when asked what could be done to fix the Mac maker. His solution was a drastic one.
"What would I do? I'd shut it down and give the money back to the shareholders," Michael Dell said before a crowd of several thousand IT executives. "
http://news.cnet.com/2100-1001-203937.html
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A grotesque misrepresentation of the quote without a shred of context. Love how the comments start 8 years after the supposed article.
Try finding a transcript of the actual interview rather than a sensationalist work of hack journalism. Some of us actually remember the interview.
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Furthermore, Dell was asked what he would do if he were to take over as CEO of Apple. His response more than once was that he would be a poor choice for that position. Not only was he not off-base with the comment, it was primarily aimed at underscoring how poor a choice he would be. Those who criticize it are actually agreeing with the point he was making at the time.
Dell foresaw the shakeout of the industry and the disappearance of many mainstays including Apple. Apple survived by entering a different
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Hmmm, I'm typing this on an Inspiron 1501 running Kubuntu 12.10, upgraded from 12.04, and the only problem I had was finding the wireless drivers. Once I got them installed everything worked fine. What distro were you trying to use?
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I tried Mint13 first and it ran fine, if a bit slow. I decided to go with Xubuntu because it was a bit smoother on default.
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The Inspiron 1501 belonged to a friend (I recently set them up with Linux Mint
laptop HDs suck (Score:2)
Why do they still keep selling laptops with utter crap HDs in em.
First hour I get a cheap laptop home (im not paying 2k dude) I get my $99 hybrid or ssd drive out and clone the internal HD to that, then put it in.
I dont want a crap 1tb SLOW ass drive, id be happy with just 256gb SSD, or 500gb hybrid. Want more space? Get an external, you arent going to watch 5 weeks of movies unless your shipwrecked.
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I dont want a crap 1tb SLOW ass drive, id be happy with just 256gb SSD, or 500gb hybrid. Want more space? Get an external, you arent going to watch 5 weeks of movies unless your shipwrecked.
One word: pr0n.
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The laptop I recently got was a refurbished Dell E6400 (Latitude). Like with your Dell, Linux works great on it: all the keyboard buttons work, the touchpad and trackpoint work, I really have no complaints. It was just as easy as installing Linux on a Thinkpad.
I guess I'll be avoiding Samsung laptops...
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Three warranty claims on 118 Dells in five years. You were saying?
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DELL does not make laptops. DELL buys laptops from ODMs and just adds bits. DELL has few warranty problems because the ODMs pay the bill. Have you noticed DELL has no real qualms about replacing bits, sends a contrator out to check, seems valid, replace part rather than repair, bill goes to ODM.
DELLs real problem are all those ODMs that DELL built up are now pushing to supply direct, basically undercutting DELL. So DELL now has to push it's service and supply with a higher price.
Re: Why keep it going? (Score:2)
My now 7 year old inspiron E1705 had exactly 2 repairs. Both from the faulty Nvidia cards that they were offering back then. Please tell me how Dells require a huge amount of repair...
Last time I saw a Consumer Reports on it Dells rated average.
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Sorry, I had a brain fart. I meant Latitude, not Inspiron. Latitude E6400 > Thinkpad T510. Both 1-2 years old, not the very latest model.
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I'm a Model M keyboard snob too, but I found the E6400 keyboard just as good as the Thinkpad's (and neither of them all *that* great). I also liked the greater use of aluminum on the Dell, and the simple boxy styling. And, it has the same Trackpoint that the Thinkpad has (but with a bigger and blue rubber top, instead of the smaller red one).
Schadenfreude (Score:3)
If they are bought out, Apple fans will likely laugh remembering Dell's famous quote about shutting down Apple.
If they aren't... their stock surged on speculation of going private... it could plummet if the buyout doesn't happen. Microsoft offered to buy Yahoo in the spring of 2008, was rebuffed, and Yahoo stock took a nosedive. The second buyout offer didn't pan out either, but they didn't take the same beating.
Re:Schadenfreude (Score:5, Insightful)
it could plummet if the buyout doesn't happen.
On a long term basis looking at the graph it drops in half semi-permanently each recession, so its about to plummet again anyway.
The question is why do a buyout now at current prices when you're sure to pay less in the future?
As for why go private, if you don't plan to ever expand / require capital ever again, you don't care about access to the stock market to raise capital, you've got to balance long term the costs of the buyout vs the permanent drain on finances of being a public stock, SOX compliance, the various fees, accounting expenses, last but not least idiotic demands from "the market" for exclusively short term (like the next quarter) profitability. I suppose the idea of Dell expanding is kind of unlikely in the near to medium term future. Maybe they have a chance for sales during the Y2036 problem in just 23 more years. Till then if the price drops in half every couple years at each recession...
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Well, they have been expanding in the services realm. Qwest, MessageOne, etc. It's all part of their IBM-ization.
-l
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The question is why do a buyout now at current prices when you're sure to pay less in the future?
Maybe it gives them more control over their future, doing it on their terms now. Versus an uncertain future when anything might happen, including an even worse outcome due to plummeting stock, loss of confidence, etc.
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No one who actually remembers the quote would laugh. Only those who perpetuate the fanboy retelling of it would.
Ask Hostess How Well That Worked Out (Score:5, Interesting)
Four years later, the equity firm is several hundred million dollars richer, Dell goes bankrupt and is liquidated, and thousands of former Dell employees are out of work.
If you were a bank considering a loan to Dell (and not already in collusion with the private equity firm), you should be very very skeptical you will ever see your money again.
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We've seen this script before. The private equity firm forces the company to take out huge loans, which are then paid to the equity firm as consulting and management fees, and bonuses. Dell's largest operating cost becomes servicing the debt, which means everything else gets cut -- product research, product quality, staff, salaries. The market quickly realizes that Dell products have become shit(tier), and customers flee.
Four years later, the equity firm is several hundred million dollars richer, Dell goes bankrupt and is liquidated, and thousands of former Dell employees are out of work.
Where have you seen this before? I am interested in reading more.
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Since the 80s.
http://en.wikipedia.org/wiki/The_Predators'_Ball [wikipedia.org]
http://en.wikipedia.org/wiki/Barbarians_at_the_gate [wikipedia.org]
2012 Election coverage of Bain – Mitt Romney’s old stomping ground.
And I would be careful with the cynicism. Yes, there is room for fraud and most use financial engineering which makes more tax sense then economic sense. However they also do a lot of good. It’s sloppily logic to slap a villain mustache – in particular this case.
Dell is putting up a large chunk of his money
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Also: Storming the Magic Kingdom [amzn.com]. Wonderful book -- informative and engaging. The Walt Disney Company was very nearly destroyed by private equity/LBO vultures.
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He probably just watched Barbarians at the Gate and is now an expert on leverage buyouts.
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Bain Capital.
This is essentially how they made all their money. Glad our nation dodged that bullet.
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Those companies prospered until the loans and extremely short sighted decisions caught up with them. Look at what they did with those stores. Bain had the chain take out fat loans used those to pay themselves huge consulting fees then sold the real estate under the store and rented it back. Great way to turn an asset into a liability for short term gain. Thus making the short term balance sheet look great, which let them put them back on the market at a huge profit while the chain was nothing but a zombie.
I
PlanetMoney did a show about this (Score:2)
PlanetMoney did a show about Bain's investments and highlighted both a success story and a failure story.
IMHO, Bain made out really well both times, but the problem was that they made out even when the compan(ies) they were buying/merging did really poorly, and Bain made out primarily based on the heavy debt burden they placed on the companies they bought.
The script seemed to be:
1) Buy Company -- adding debt
2) Borrow for acquisitions/mergers -- adding debt
3) Pay Bain first. A lot.
4) Add more debt and compa
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the problem was that they made out even when the compan(ies) they were buying/merging did really poorly
It's not so much a problem as a fucking business plan.
Re: PlanetMoney did a show about this (Score:2)
The banks because they weren't traditional S&Ls were selling the majority of the debt onward to the market where it was safely absorbed by pension funds, hedges, and large investors. By safely absorbed I mean for the bank, the market was fucked over hard. This was the running issue of the last two decade when the chickens came home to roost in 2008.
Bain just needed to show the bank could get a few million for pushing their loans theough to the market while hiding the originators.
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Ultimately what keeps the music playing is the bankers have a stable of naive lenders who are willing to not notice the obvious in a desperate chase for a couple extra percentage points of interest rate. Why that happens is complex. Sometimes it is because bankers are happy to screw over their clients with bad advice to make their quarterly numbers. Sometimes it is because the lenders are greedy.
Lending money that allows the owners/management to take their skin out of the game is inherently risky. These
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I can't speak to the forcing of huge loans. For that, you can probably just look at anything Bain Capital has touched. I did look a little into KB Toys and Border's (book store), both of which were shuttered after being more-or-less purchased by private equity firms. In both cases, the company was turning a profit, but the ROI wasn't sufficient for the private equity firm (so-called "vulture capitalists", another term to search for). Being the leading owner but without
Re:Ask Hostess How Well That Worked Out (Score:5, Informative)
Ask Mitt Romney How Well That Worked Out (Score:2, Informative)
Isn't it fun to do that when you're on the private equity firm side? There's no risk whatsoever, and you get nice fat consulting fees and management fees and bonuses.
Also, typically the management that sold to the private equity firm takes home a nice big paycheck as part of the deal.
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The cool thing is, with fox running the chicken coop, every cent of revenue will be given to the new investors, and every cent of liability will be charged to the employees, their pension fu
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Well that's bleak... just out of interest:
What happens to the extended (what's the max for Dell? 4 years?) Next-Business-Day warranties you buy today if your described scenario happens in, say, two years...?
What about the corporate side? If a company buys x hundred Dell rack servers (say R320) today, with y year support contracts, but Dell goes under completely in y-1 years... is the company with the nearly-new servers simply fucked?
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Private equity is a scam (Score:2, Interesting)
As far as I know, "private equity" firms are companies that restructure companies while borrowing cash to finance said company ... but leaving the company holding the bag on that dept. Should the company fall (now with even more debt and someone else steering the ship) the equity firm gets a big pay off while yet another company goes under.
Good luck with that. *rolls eyes*
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Not necessarily. See also the Hostess bankruptcy.
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I think you are missing an important point – the Private Buyout Firm is the shareholder – they have bought out all of the other shareholders – hence the name.
The shareholder can’t sue themselves – so that’s out. If the firm goes bankrupt – the buyout firm loses their money, etc. (And contrary to popular belief they do have to put up a good chunk of change upfront.) The Buy Out firm wants the company to succeed. (There is a sub-class of Buy Out firms called vulture f
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I admit I should probably know this, but what is the exact mechanism when a buyout happens?
In other words, how do they force other shareholders to sell? (Why can't someone hold onto their stock and be the equivalent of the stereotypical one homeowner who refused to sell so now there's a giant building AROUND their tiny little house.)
I presume it's: >50% of shares are owned by one entity, they get a new board, and somehow the board authorizes a buyout by X company. But I still don't know what the method
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A takeover or merger works when company A offers to buy company B. Company A can offer some combination of stock in the new company, cash, or debt (less popular now). Company B then decides to take the deal or not.
So, let’s be specific. Private Equity firms tend not to have stock so they tend to offer cash. Dell is currently trading at $12.50 so they would offer more – let’s say $15 to $20 per share. The Dell Board has 3 options.
First, they can accept the bid. All of the old shareholders h
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One more point - you mentioned the “stereotypical one homeowner who refused to sell so now there's a giant building AROUND their tiny little house”. In this case you don’t own the house – you own a share of a house. Do you want to be trapped in that house?
I knew a family that owned a 1/64 share of a vacation home left to them by their grandparents. They had moved to the other cost. Scheduling was a headache – all 8 families wanted it in the summer. They had to pay 1/64 of the p
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OK thanks, that answers the specific question -- there is a specific percentage of share owners that they can get to agree to the buyout after which the rest are forced to sell. (Or rather, I guess one's broker literally just sells for you. If you had paper shares? That seems unlikely nowadays.)
I thought that was likely the case, but I didn't know the exact mechanism.
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It can happen one of the 2 ways.
First, the board could make a decision. The majority shareholders can’t block this. This is to prevent the majority shareholders screwing the minority shareholders. This normally happens in a cash merger. Stock is trading at $12.5 – we have an offer of $20 – not much of a decision.
Sometimes it’s a shareholder referendum. In this case the majority wins. This is when things are close – normally in a merger. Do I want to swap my 1 Compaq share for 0
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I think debt should never be an asset but a liability. Do the accountants know something I do not? Logically, if you borrow $1,000 then an equal liability for $1000 should be there as well?
Perhaps surprisingly, accountants are indeed familiar with the concept of double entry bookkeeping. If you borrow $1000 you get an asset of $1000 in the form of an increase in your bank balance and a liability of $1000 in the form of a loan due.
Bizarrely your assets always equal your liabilities (or, rather, your debits equal your credits). Anyone who wants to ask "how do you make any money then" can sign up for my online double entry bookkeeping course, $1000, all major cards accepted, no refunds.
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Incorrect. Unless it reforms as a partnership, there will be shareholders. The shares simply won't be traded publicly.
No, I don't care for Intel, MS, or Dell stickers (Score:1)
I've bought two Dells since my Pentium Pro, not counting my old Alienware, before Dell bought them.
My most recent two were cheap mid-high range from Best Buy or similar, rather than mail order. Dells on display were now the premium ones, for identical features.
So...screw 'em. Dell has lost its way.
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Dell had a 'way'?
Sell Dell to its Asian Suppliers (Score:2)
That is the only singular way I can see it will survive. Good? I have no clue.
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Does Dell have a purpose other than being middlemen?
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They're a brand almost as valuable as MTD mowers.
Goodby (Score:2)
Farewell Dell. I feel sorry for any employees with retirement there.
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Dell has no "retirement".
From the inside (Score:4, Insightful)
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Or maybe it's because they just didn't put out very high quality in their established product lines. My 6-man office is filled with Dell laptops (Precision and Latitude, no low-end junk) and it's like working in a freakin wind tunnel...
Stupid (Score:1)
Why couldn't it be HP?
Dell is still making money. Just not growing. I know I know the shareholders cry liquidate if they do not see results by eveyr single quarter with growth regardless of solid fundalmentals and cash onhand.
It is rumored IKahn is trying a hostile takeover with HP and with both HP and Dell gone it means big trouble for corporate buyers. Perhaps the unthinkable SamSung and Asus be corporate products?
Or will it damage the Windows and PC brand more? We keep hearing how PCs are dead and how we
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Or will it damage the Windows and PC brand more? We keep hearing how PCs are dead and how we are all dying to do real content creation on single tasking oriented GUIs on tiny tablets (sarcasm intended).
You say this sarcastically, but it's true. Everyone really is dying to switch over to single-tasking GUIs on tiny tablets. Everywhere you go, people are saying the same thing, that touch UIs and tablets are the way of the future. Even here on Slashdot and other tech forums, all the technophiles are praisin
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This seems to make sense, but all the other Slashdotters are telling me otherwise. Same goes for most other tech forums. Most people are singing the praises of Windows 8 and touchscreens, and talking about how we're going to have touch-enabled desktop systems soon and everyone's going to get used to holding their arms straight out all day long.
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Most of those Windows 8 fanboy posts here and elsewhere are obvious shills, though. Basically Ballmer is enlisting the Mechanical Turk in an effort to save his job.
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No way. There's simply far, far too many of these posts to be shills working for Redmond. Worse, there's tons of them here on /., with low-ish UIDs, and I never see many responses refuting these peoples' posts.
I wonder how that fares for Microsoft? (Score:2, Funny)
Michael Dell has always swallowed more of Balmer's cock, than would generally be considered comfortable. And Gates's before him. Would new ownership affect this longstanding, gaging, relationship?
Time to say it (Score:3)
A Dell - Rolling in the deep.....
More than hardware (Score:3, Interesting)
Who gets the IP? (Score:2)
Colour coded input jacks changed the back side of personal computing.... a Dell innovation.
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I really hope Dell doesn't kill their server side. They and HP are the only two I like right now.
Dude your getting sold! (Score:2)
Dude your getting sold!
So what company instead? (Score:2)
If Dell is going to go down the tubes, who's the replacement?
We've been very happy with Dell computers over the past 10-15 years. We don't need or use their support, but the computers themselves have been solid and reliable. So - if Dell gets bought out and goes down the tubes - what companies to /.ers recommend for an SME that wants the things to "just work"?
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Apple, HP, Lenovo, Acer, Asus, ...
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Alienware was always an overpriced joke
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Alienware is not about paying 500 dollars just for a fancy LED on your case. Don't be ridiculous.
Alienware is about paying 500 dollars for a totally ridiculous-looking case, which includes a bunch of fancy extra LEDs.
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And then it'll stop being an overpriced joke where the only cool part is that you just paid 500 dollars to get a fancy LED on your case.
Oh wait, what the fuck is cool about that shit?
Admittedly, it was cool back in 1998 at the LAN parties - but only if you soldered the little bastard on yourself.
Same with the lucite case window, the jerry-rigged liquid cooling system, the LED lights inside, the massive power supply, and the ginormous fan bolted on the side - just to make it look as if your bargain-basement system actually needed the same CFM rating as a Peterbilt radiator fan**.
'course, those days are long-the-hell gone, but I'm man enough to admit that I got into it once. I'll even adm
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If there is a Microcenter near your town you can build your own for cheap. My exgf was poor and needed a new computer several years ago. I had an older 4 year old system lying around so I took the board and video card out and went to Microcenter and built blue led neon lamps and a wicked looking case for $140 and a PSU.
Little did she know she was running on an older 4 year old system but all she did was type papers and IM friends. You do not need a monster computer anymore unless you run Gentoo :-)
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I had horrible blue LEDs inside and on the front of the case. I couldn't sleep if I had to download something big. I eventually completely disconnected them.
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is that all, i had 5ft UV lights, and strobe lights, try sleeping to that.
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Admittedly, my understanding of the rules of public corporation governance is sketchy, but why are stockholders forced to sell their shares? Maybe if they changed the rules so that no one could ever be forced to sell, things would be different.
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Because it is a public company run for the good off all shareholders – and private equity buyouts is the one great defense against a complacent management or minority shareholder.
What if a firm will not be run for the benefit of the shareholder. Maybe the founding family likes the prestige and perks of “owning” a business. Maybe the CEO likes running a big firm – easier to justify the private jet. What are you to do then? Or, take the fillip argument. Dell right now trades at $12.50.
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I'm still not seeing why allowing the board to force shareholders to sell is a good thing. If the majority of the shareholders want to run the company in an unprofitable way, so what? Why should anyone be allowed to force them to do otherwise? The minority shareholders can sell their shares and find a more profitable company in that case. If the founding family doesn't have a majority of shares, then this shouldn't even be a problem. Or, for your flip argument, if Michael Dell refuses to sell at $20, a
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What am I missing? Other than the fact that the logistics of contacting a bunch of people who have stock shares in their IRA accounts and giving them an offer may be a lot of extra work for the private-equity buyer (but it should be pretty easy these days since most people have their portfolios with a relatively small number of brokerages; also, most shares are probably owned by institutions, not individuals anyway), I'm not seeing the downside.
The problem here is that you want to treat everybody fairly. When this has been done in the past the buyer would offer generous terms until they got to the 50% mark – at which point they effectively owned the firm – and which point they offered every else a much lower price. Take it or lump it.
This way it’s public. No sweetheart deals. Everybody gets the same price.
As to your larger point - sure, try to pick apart the ownership of Samsung or Formula One. Or read up on early American Railro
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Hmm, thanks for explaining it. It does make sense now.