In The News

Dell Struggling With Turnaround, Turns to M&A

Dell’s Founder & CEO, Michael Dell, told Bloomberg News that he plans to make strategic aquisitions to help bolster his turnaround plan.

Dell, who returned to run Dell back in 2007, has struggled to raise Dell’s stock price. He has made significant changes at the company, first by looking to fix its expense line by making deep staff cuts around the world. In addition, he has restructured its consumer business and shifted its focus towards traditional retail and away from its traditional “Direct” to the customer channel.

The company has made a few small acquisitions since his return to the company. Its spent $1.4B on the purchase of storage technology company EqualLogic and also hired David L, Johnson, IBM’s M&A Lead in late 2008 in what many assumed was a precursor to an expanded M&A strategy. Johnson’s first deal occurred last week with Dell’s $3.9B purchase of I/T services firm Perot Systems, based in Dallas, TX.

NC Asking Dell to Pay Back Incentives

North Carolina Governor Beverly Purdue went on record this week with the expectation that Dell repays the $280+ million of incentives offered to the company for opening a desktop manufacturing plant in the state.

Quoting Purdue, “We made it very clear to them (Dell officials), and they already understood it quite frankly, that every red cent of incentives money had to come back to the people of North Carolina,”

However, Forbes.com reported on 10.09.2009 that it is unlikely that the state will recoup much of the funding that was spent on road upgrades and worker training.

Dell Expands Services Footprint In China

Perot Systems, the Dallas-based I/T services company that is slated for acquisition by Dell, announced that it will acquire China-based BearingPoint. The deal, which will ultimately give Dell a bigger services footprint in China, is of unknown value – financial terms were not disclosed.

Founded in 2001, BearingPoint is currently in Bankruptcy and serves clients in China’s energy, automotive, insurance and financial services industries.

Alert: Michael Dell is Still Really Rich

Even with Dell’s stock at $15, down from its 2008 high of $25/share and way off its high of $55 back in 2000, Michael Dell is really really, really, rich.

Austin’s Business Journal reports that Michael Dell is still worth $14.5B, down from $17.3B in 2008.

Now, for those of you not in the know, Michael has put significant effort into diversifying the family assets beyond Dell, Inc and is reported that approximately 2/3rds of his holdings are outside of Dell. He created MSD Capital in 1998 to make investments on his behalf and now has 10 professionals on staff. The group has invested in a wide range of activities including real estate, car dealerships, a dental practice management company, and into the restaurant industry (Stake’n'Shake and iHOP).

Dell to offer Intel App Store on Consumer Netbooks

Apple’s iPhone app store has driven legions of me-too offerings across the industry. The smartphone industry is rushing to emulate Apple’s success.

Microsoft is launching an app store this October as part of its Windows Mobile 6.5 launch, Samsung, Nokia and Blackberry already have device specific stores as well. Durham, NC based PocketGear is a company that specializes in creating web-based application stores for device manufacturers.

Now the PC gang is getting on the bandwagon. Intel has announced the creation of custom-branded application stores for its OEM partners for their Intel Atom powered devices. These stores will offer software applications compatible with both Windows and Linux.

Dell Closes Fraud Case with NY State

Dell and Dell Financial Services ended its legal battle with the State of New York and its politically motivated Attorney General Andrew Cuomo yesterday by paying $4 million. Dell and its subsidiary were accused of “fraud, false advertising, and deceptive business practices, including offering misleading financing, and failing to honor rebates, warranties, and service contracts”.

The jury portion of the suit was settled last May when the company was found guilty and the announced cash settlement “would be used to compensate customers who were affected by Dell’s practices”.

The reality of the case is that the Attorney General’s office stated that promotional financing rates were used to advertise and drive demand for Dell’s products, while very few of the customers ever received the promotional rate. The low dollar value of the award to Dell customers shows that the actions by Dell were either not very agregious or Mr. Cuomo had gotten all the political capital out of winning a judgement against a large corporation and the need to actually provide relief to the voting public was not beneficial to his campaigning for the Governor of NY.