The Dell deal: Cheat Sheet
What’s the news?
Dell is likely to announce the closure of a deal that would take the company private. The Texas based PC maker has been in talks with a consortium of investors led by its founder Michael Dell. The deal size is expected to be $24 billion, making it the biggest leveraged buy out deal in the last few years.
Who are the key players?
Silver Lake: A technology focused private equity firm whose current portfolio includes well known names like Alibaba, Zynga and Sabre. Expected to chip in $1 billion to the consortium.
Microsoft: Software giant with cash reserves of over $ 68 billion. Expected to invest $2 billion, mostly in the form of debt.
Michael Dell: The man who founded the company in his dorm room at University of Texas. His financial empire extends beyond Dell, through MSD Capital. He will contribute his 16% stake in Dell, plus cash of about $700 million.
How will it impact them?
Michael Dell: Taking it private will give him more space to change its strategy, away from public glare. “ People who have worked with him say that the CEO wants to take the company private—and secure majority ownership—to secure his legacy,” a WSJ report says.
Silver Lake: An opportunity to be a part of a turnaround. Dell’s market cap is just a fourth of what it used to be when things were going good.
Microsoft: A good deal with a hardware maker will be in line with its strategy of becoming a devices + software company. It’s already working closely with Nokia for mobile phones. With Dell, other form factors will open up.
Several reports say that a deal could be announced by the end of the day today. How it goes forward from there depends on the pricing, for that will determine how the shareholders will vote.
A software that can predict tomorrow’s news
“The closest thing I met to a master of the markets.” That’s how Lewis describes him.
One of Alexander’s unique abilities was to predict the secondary and tertiary effects of an event. “He saw the markets as a tightly woven web. Yank on one filament in the web, and the other filaments had to move, too,” Lewis writes.
Here’s an example of that mastery.
“Remember Chernobyl? When news broke that the Soviet nuclear reactor had exploded, Alexander called. Only minutes before, confirmation of the disaster had blipped across our Quotron machines, yet Alexander had already bought the equivalent of two supertankers of crude oil.
The focus of investor attention was on the New York Stock Exchange, he said. In particular it was on any company involved in nuclear power. The stocks of those companies were plummeting. Never mind that, he said. He had just purchased, on behalf of his clients, oil futures. Instantly in his mind less supply of nuclear power equaled more demand for oil, and he was right.
His investors made a large killing. Mine made a small killing.
Minutes after I had persuaded a few clients to buy some oil, Alexander called back.
“Buy potatoes,” he said. “Gotta hop.” Then he hung up.
Of course. A cloud of fallout would threaten European food and water supplies, including the potato crop, placing a premium on uncontaminated American substitutes. Perhaps a few folks other than potato farmers think of the price of potatoes in America minutes after the explosion of a nuclear reactor in Russia, but I have never met them.”
What if you can get a computer mimic Alexander?
Technology Review reports: Researchers have created software that predicts when and where disease outbreaks might occur based on two decades of New York Times articles and other online data. The research comes from Microsoft and the Technion-Israel Institute of Technology.
Also of interest
- Facebook Is Said to Create Mobile Location-Tracking App: Bloomberg
- Google Wants To Ditch The Password – Sounds Lovely: Singularity Hub
- University of Waterloo: Once BlackBerry Focused, a Campus Widens Its View: NYTimes
- Google Glass to use bone vibration instead of traditional headphones: Wired