DELL - Dell Inc.

[BargainValueHunter]

http://blogs.barrons.com/techtraderdaily/2013/01/03/dell-ubs-ups-target-to-10-50-on-enterprise-potential/

 

Writes Milunovich, who has a Neutral rating on shares of Dell, but today raised his price target to $10.50 from $9.75, the company has put together “an attractive portfolio of enterprise technology,” and that he is “beginning to hear positive user comments” though many people “didn’t know Dell did that.”

 

Milunovich was referring to what appears to be an improved set of products for enterprise, and he writes that corporate IT chiefs are willing to hear what the company has to offer:

 

Dell’s product set is much improved; now it must work on addressing high-level user problems. Dell’s 12G servers are taking share from HP and IBM while its hyperscale efforts are more developed than competitors’. Dell storage arguably offers a cost of ownership advantage in the middle market though revenue is declining. Quest is underestimated, according to Mr. Haas. Quest had made a number of interesting acquisitions analysts have overlooked, such as Kitenga (Hadoop visualization/analytics) and Toad (administration of relational databases). We think Dell is putting together a reasonable end-to-end solution for mid-market and larger enterprises […] The good news is that CIOs are willing to meet with Dell; Mr. Haas just returned from a tour of Wall Street. There is particular interested in converged infrastructure, pods housing server/network/storage/software and wrapped with services. Dell has introduced its Active Infrastructure integrated systems, arguing that, with no legacy to protect, Dell can engineer a more open, flexible solution. It acquired Gale Technologies, which helps orchestrate compute resources. Dell has created the Enterprise Systems & Solutions Group to house its converged infrastructure effort. Similarly, Dell Cloud Solutions offers private cloud based on VMware and now public cloud using OpenStack. The company sees most of the opportunity, especially in the midmarket, to be in private cloud.

[Parsad]

http://blogs.barrons.com/techtraderdaily/2013/01/03/dell-ubs-ups-target-to-10-50-on-enterprise-potential/

 

Writes Milunovich, who has a Neutral rating on shares of Dell, but today raised his price target to $10.50 from $9.75, the company has put together “an attractive portfolio of enterprise technology,” and that he is “beginning to hear positive user comments” though many people “didn’t know Dell did that.”

 

Milunovich was referring to what appears to be an improved set of products for enterprise, and he writes that corporate IT chiefs are willing to hear what the company has to offer:

 

Dell’s product set is much improved; now it must work on addressing high-level user problems. Dell’s 12G servers are taking share from HP and IBM while its hyperscale efforts are more developed than competitors’. Dell storage arguably offers a cost of ownership advantage in the middle market though revenue is declining. Quest is underestimated, according to Mr. Haas. Quest had made a number of interesting acquisitions analysts have overlooked, such as Kitenga (Hadoop visualization/analytics) and Toad (administration of relational databases). We think Dell is putting together a reasonable end-to-end solution for mid-market and larger enterprises […] The good news is that CIOs are willing to meet with Dell; Mr. Haas just returned from a tour of Wall Street. There is particular interested in converged infrastructure, pods housing server/network/storage/software and wrapped with services. Dell has introduced its Active Infrastructure integrated systems, arguing that, with no legacy to protect, Dell can engineer a more open, flexible solution. It acquired Gale Technologies, which helps orchestrate compute resources. Dell has created the Enterprise Systems & Solutions Group to house its converged infrastructure effort. Similarly, Dell Cloud Solutions offers private cloud based on VMware and now public cloud using OpenStack. The company sees most of the opportunity, especially in the midmarket, to be in private cloud.

 

He ups his target when the stock is already at his target...pphhhttt!  Well, I guess if you look at it another way, at least he was right.  :o  Cheers!

[A_Hamilton]

http://blogs.barrons.com/techtraderdaily/2013/01/03/dell-ubs-ups-target-to-10-50-on-enterprise-potential/

 

Writes Milunovich, who has a Neutral rating on shares of Dell, but today raised his price target to $10.50 from $9.75, the company has put together “an attractive portfolio of enterprise technology,” and that he is “beginning to hear positive user comments” though many people “didn’t know Dell did that.”

 

Milunovich was referring to what appears to be an improved set of products for enterprise, and he writes that corporate IT chiefs are willing to hear what the company has to offer:

 

Dell’s product set is much improved; now it must work on addressing high-level user problems. Dell’s 12G servers are taking share from HP and IBM while its hyperscale efforts are more developed than competitors’. Dell storage arguably offers a cost of ownership advantage in the middle market though revenue is declining. Quest is underestimated, according to Mr. Haas. Quest had made a number of interesting acquisitions analysts have overlooked, such as Kitenga (Hadoop visualization/analytics) and Toad (administration of relational databases). We think Dell is putting together a reasonable end-to-end solution for mid-market and larger enterprises […] The good news is that CIOs are willing to meet with Dell; Mr. Haas just returned from a tour of Wall Street. There is particular interested in converged infrastructure, pods housing server/network/storage/software and wrapped with services. Dell has introduced its Active Infrastructure integrated systems, arguing that, with no legacy to protect, Dell can engineer a more open, flexible solution. It acquired Gale Technologies, which helps orchestrate compute resources. Dell has created the Enterprise Systems & Solutions Group to house its converged infrastructure effort. Similarly, Dell Cloud Solutions offers private cloud based on VMware and now public cloud using OpenStack. The company sees most of the opportunity, especially in the midmarket, to be in private cloud.

 

He ups his target when the stock is already at his target...pphhhttt!  Well, I guess if you look at it another way, at least he was right.  :o  Cheers!

 

If you read his report, he absurdly assumes that DELL will have $8.40 per share in net cash by 1/2015, and will earn $1.90 per share in the 2014/2015 year, which means he is valuing core DELL at 1.4x his own esimate of earnings two years out. I don't know what DELL is worth, but I know this guys modeling skills leave much to be desired.

[BargainValueHunter]

http://blogs.barrons.com/techtraderdaily/2013/01/03/dell-ubs-ups-target-to-10-50-on-enterprise-potential/

 

Writes Milunovich, who has a Neutral rating on shares of Dell, but today raised his price target to $10.50 from $9.75, the company has put together “an attractive portfolio of enterprise technology,” and that he is “beginning to hear positive user comments” though many people “didn’t know Dell did that.”

 

Milunovich was referring to what appears to be an improved set of products for enterprise, and he writes that corporate IT chiefs are willing to hear what the company has to offer:

 

Dell’s product set is much improved; now it must work on addressing high-level user problems. Dell’s 12G servers are taking share from HP and IBM while its hyperscale efforts are more developed than competitors’. Dell storage arguably offers a cost of ownership advantage in the middle market though revenue is declining. Quest is underestimated, according to Mr. Haas. Quest had made a number of interesting acquisitions analysts have overlooked, such as Kitenga (Hadoop visualization/analytics) and Toad (administration of relational databases). We think Dell is putting together a reasonable end-to-end solution for mid-market and larger enterprises […] The good news is that CIOs are willing to meet with Dell; Mr. Haas just returned from a tour of Wall Street. There is particular interested in converged infrastructure, pods housing server/network/storage/software and wrapped with services. Dell has introduced its Active Infrastructure integrated systems, arguing that, with no legacy to protect, Dell can engineer a more open, flexible solution. It acquired Gale Technologies, which helps orchestrate compute resources. Dell has created the Enterprise Systems & Solutions Group to house its converged infrastructure effort. Similarly, Dell Cloud Solutions offers private cloud based on VMware and now public cloud using OpenStack. The company sees most of the opportunity, especially in the midmarket, to be in private cloud.

 

He ups his target when the stock is already at his target...pphhhttt!  Well, I guess if you look at it another way, at least he was right.  :o  Cheers!

 

If you read his report, he absurdly assumes that DELL will have $8.40 per share in net cash by 1/2015, and will earn $1.90 per share in the 2014/2015 year, which means he is valuing core DELL at 1.4x his own esimate of earnings two years out. I don't know what DELL is worth, but I know this guys modeling skills leave much to be desired.

 

If Dell is earning $1.90 in this time frame after sitting below $8.70 a few weeks ago then those who took the plunge should end up REAL happy. :)

[T-bone1]

http://blogs.barrons.com/techtraderdaily/2013/01/03/dell-ubs-ups-target-to-10-50-on-enterprise-potential/

 

Writes Milunovich, who has a Neutral rating on shares of Dell, but today raised his price target to $10.50 from $9.75, the company has put together “an attractive portfolio of enterprise technology,” and that he is “beginning to hear positive user comments” though many people “didn’t know Dell did that.”

 

Milunovich was referring to what appears to be an improved set of products for enterprise, and he writes that corporate IT chiefs are willing to hear what the company has to offer:

 

Dell’s product set is much improved; now it must work on addressing high-level user problems. Dell’s 12G servers are taking share from HP and IBM while its hyperscale efforts are more developed than competitors’. Dell storage arguably offers a cost of ownership advantage in the middle market though revenue is declining. Quest is underestimated, according to Mr. Haas. Quest had made a number of interesting acquisitions analysts have overlooked, such as Kitenga (Hadoop visualization/analytics) and Toad (administration of relational databases). We think Dell is putting together a reasonable end-to-end solution for mid-market and larger enterprises […] The good news is that CIOs are willing to meet with Dell; Mr. Haas just returned from a tour of Wall Street. There is particular interested in converged infrastructure, pods housing server/network/storage/software and wrapped with services. Dell has introduced its Active Infrastructure integrated systems, arguing that, with no legacy to protect, Dell can engineer a more open, flexible solution. It acquired Gale Technologies, which helps orchestrate compute resources. Dell has created the Enterprise Systems & Solutions Group to house its converged infrastructure effort. Similarly, Dell Cloud Solutions offers private cloud based on VMware and now public cloud using OpenStack. The company sees most of the opportunity, especially in the midmarket, to be in private cloud.

 

He ups his target when the stock is already at his target...pphhhttt!  Well, I guess if you look at it another way, at least he was right.  :o  Cheers!

 

If you read his report, he absurdly assumes that DELL will have $8.40 per share in net cash by 1/2015, and will earn $1.90 per share in the 2014/2015 year, which means he is valuing core DELL at 1.4x his own esimate of earnings two years out. I don't know what DELL is worth, but I know this guys modeling skills leave much to be desired.

 

I read his initiation report and I think he has a very good understanding of the business - and he definitely thinks it is worth a lot more than $10.50.  I got the distinct impression that he was just waiting - "market timing" - until he thinks it is about to pop.  So far he has done a great job of that an I've been impressed with his work . . .

 

I don't know how to market time, so I've been buying since $12 and have averaged down to about $10.  Like some others on this board, I am happy to wait for the inevitable at these prices, and am still adding more. 

[zippy1]

I read his initiation report and I think he has a very good understanding of the business - and he definitely thinks it is worth a lot more than $10.50.  I got the distinct impression that he was just waiting - "market timing" - until he thinks it is about to pop.  So far he has done a great job of that an I've been impressed with his work . . .

I think this is due to the nature of his job, which caters to retail investors. 

 

I learned this first hand from my sister, who is a private banker for a big bank. She believes in value investing herself and has her money invested that way. However, she told me that since most of her clients would call her if there is a 2% drop, she can only recommend something unless the trend is so obvious to anyone; of course, by that time, the upside is much reduced.

 

 

[mcliu]

I think these big institutional analysts usually cater to their institutional clients..

Nonetheless, they're probably judged by the accuracy of their 12-month targets, and hence the short-term views. I'm sure they would have different perspectives, if they were judged by their long-term track-records, but that's difficult to implement structurally.

[alwaysinvert]

http://blogs.barrons.com/techtraderdaily/2013/01/03/dell-ubs-ups-target-to-10-50-on-enterprise-potential/

 

Writes Milunovich, who has a Neutral rating on shares of Dell, but today raised his price target to $10.50 from $9.75, the company has put together “an attractive portfolio of enterprise technology,” and that he is “beginning to hear positive user comments” though many people “didn’t know Dell did that.”

 

Milunovich was referring to what appears to be an improved set of products for enterprise, and he writes that corporate IT chiefs are willing to hear what the company has to offer:

 

Dell’s product set is much improved; now it must work on addressing high-level user problems. Dell’s 12G servers are taking share from HP and IBM while its hyperscale efforts are more developed than competitors’. Dell storage arguably offers a cost of ownership advantage in the middle market though revenue is declining. Quest is underestimated, according to Mr. Haas. Quest had made a number of interesting acquisitions analysts have overlooked, such as Kitenga (Hadoop visualization/analytics) and Toad (administration of relational databases). We think Dell is putting together a reasonable end-to-end solution for mid-market and larger enterprises […] The good news is that CIOs are willing to meet with Dell; Mr. Haas just returned from a tour of Wall Street. There is particular interested in converged infrastructure, pods housing server/network/storage/software and wrapped with services. Dell has introduced its Active Infrastructure integrated systems, arguing that, with no legacy to protect, Dell can engineer a more open, flexible solution. It acquired Gale Technologies, which helps orchestrate compute resources. Dell has created the Enterprise Systems & Solutions Group to house its converged infrastructure effort. Similarly, Dell Cloud Solutions offers private cloud based on VMware and now public cloud using OpenStack. The company sees most of the opportunity, especially in the midmarket, to be in private cloud.

 

He ups his target when the stock is already at his target...pphhhttt!  Well, I guess if you look at it another way, at least he was right.  :o  Cheers!

 

If you read his report, he absurdly assumes that DELL will have $8.40 per share in net cash by 1/2015, and will earn $1.90 per share in the 2014/2015 year, which means he is valuing core DELL at 1.4x his own esimate of earnings two years out. I don't know what DELL is worth, but I know this guys modeling skills leave much to be desired.

 

If Dell is earning $1.90 in this time frame after sitting below $8.70 a few weeks ago then those who took the plunge should end up REAL happy. :)

Disregarding the issue of long-term success, there clearly is something to be said for loading up at the point of maximum negative feedback. I still feel kind of baffled by the movement in the stock around the latest Q release since it contained nothing new. Oh well, I could take a dip to $9 again as I would very much like to increase my 10% position a bit at those prices.

[txlaw]

Good article on MSFT hardware competition with the OEMs.  Demonstrates the frenemy status that exists between them.

 

http://news.cnet.com/8301-10805_3-57561849-75/how-microsoft-became-a-control-freak-with-tablet-makers/

[PlanMaestro]

Sorry, I don't have the write-up.

 

SumZero Weekly Top Idea: Dell, Inc.

Nicholas Snyder.

Price At Recommendation: $10.49

Target Price: $16.00

 

Dell is trading for ~3.5 times FCF (net of adjusted excess cash), and the non-PC business is now worth more than the PC business. A detailed write-up with tables is attached below.

As far as a near-term catalyst, I would note that the company did not buy back any shares in the last quarter. I don't believe Dell is planning to purchase a massive software company (see acquisition analysis in the detailed write-up), so there must be some other reason for this anomaly. This is an anomaly because Dell spent $2.7 billion buying back shares at much higher prices in 2011 (fiscal 2012) and bought back $723 million worth of stock in the first half of this year.

 

I don't believe that Michael Dell no longer believes his stock is a good deal (at a ~35% discount to his most recent $400 million personal open market purchase), but rather that he is considering a buyout of the company. Michael Dell is estimated to be worth $16 billion by Forbes, so he could definitely get this done. For what it is worth, his personal hedge fund has been selling down their equity positions this year.

 

I believe Dell is a great value in its own right, and that it has a number of great businesses (notably servers, storage, deployment and support services, and software), and a strong market position among the small and medium businesses that will increasingly be consuming IT services.

The concerns about the PC business are overblown and Dell's transition to a contract manufacture model have given this business a lot of operational flexibility as was well demonstrated this year. The PC business can go to hell for all I care and this investment will still do well (it is a bit frustrating that people only want to talk about the PC business), but even if it does, $2 billion in further cuts to fixed costs at "core Dell" will ensure that it still throws off FCF.

 

If the stock isn't LBO'd or there are no large buybacks, then this is simply a very cheap and growing IT company. If calculate actual net excess cash to be $4.00 per share (that they could get at). Some people want to say that this $7 billion will be swallowed up by acquisitions, but these people then need to admit that this is a growth company. Other people think its stagnant - in that case 3.5X FCF is a good price to pay.

 

David Einhorn was right about the PC business slowing and the amount being spent on acquisitions, but these realities are now priced in and the stock is $3.00 lower. On an EV basis, Dell's value has fallen roughly 30% since Einhorn decided to sell. It was also disappointing that Dell's board didn't seriously consider his GO-UPS strategy, which was brilliant.

 

Unlike HP, Dell is not replacing lost PC revenue with expensively bought, non-synergistic, new revenue, but rather building out an end-to-end IBM-like services model at a lower price point. Dell has not had to take a write-down on any of their acquisitions, so a minimum it appears they are not destroying value. Any way you slice it, this company is dirt cheap, regardless of what the PC business does. The net excess cash adds a lot of flexibility as well.

(see attached write-up for much more detail on all of the above)

[ourkid8]

Dells M&A head Dave Johnson is leaving to go to Blackstone.  He was one of the key architects to help turn around IBM into the power house that it is.  It is a huge loss for the company.  On brighter news, this has been a wonderful investment so far buying below $9! I cannot wait for the next round of share repurchases to begin...

 

http://blogs.wsj.com/deals/2013/01/07/dells-ma-head-johnson-leaving-for-blackstone/?mod=yahoo_hs

[txlaw]

Dells M&A head Dave Johnson is leaving to go to Blackstone.  He was one of the key architects to help turn around IBM into the power house that it is.  It is a huge loss for the company.  On brighter news, this has been a wonderful investment so far buying below $9! I cannot wait for the next round of share repurchases to begin...

 

http://blogs.wsj.com/deals/2013/01/07/dells-ma-head-johnson-leaving-for-blackstone/?mod=yahoo_hs

 

In some respects, this is good news, as it indicates that the platform is solid, just as Michael Dell said at Dell World. 

 

Onwards.

[ourkid8]

If it is solid, why did they pledge to continue its "aggressive M&A activities."?  I cannot wait for the day the focus will not be on M&A but on organic growth! Slowly but surely this is turning into a baby IBM.

 

Tks,

S

 

Dells M&A head Dave Johnson is leaving to go to Blackstone.  He was one of the key architects to help turn around IBM into the power house that it is.  It is a huge loss for the company.  On brighter news, this has been a wonderful investment so far buying below $9! I cannot wait for the next round of share repurchases to begin...

 

http://blogs.wsj.com/deals/2013/01/07/dells-ma-head-johnson-leaving-for-blackstone/?mod=yahoo_hs

 

In some respects, this is good news, as it indicates that the platform is solid, just as Michael Dell said at Dell World. 

 

Onwards.

[txlaw]

Btw, there was a denial by Sharp today that it is talking with INTC for a capital injection.

 

Interestingly, no denial about DELL, which was reportedly in talks with Sharp along with QCOM, INTC, and Foxconn.

 

It would be very, very interesting if DELL injected capital into a company that helps supply the amazing screens that AAPL uses.  If Sharp can get its act together and the Japanese really do put the printing press on overdrive, this could be a great investment over time. 

 

Or it could be a total loss depending on the ineptitude of Sharp.

[txlaw]

If it is solid, why did they pledge to continue its "aggressive M&A activities."?  I cannot wait for the day the focus will not be on M&A but on organic growth! Slowly but surely this is turning into a baby IBM.

 

Tks,

S

 

Dells M&A head Dave Johnson is leaving to go to Blackstone.  He was one of the key architects to help turn around IBM into the power house that it is.  It is a huge loss for the company.  On brighter news, this has been a wonderful investment so far buying below $9! I cannot wait for the next round of share repurchases to begin...

 

http://blogs.wsj.com/deals/2013/01/07/dells-ma-head-johnson-leaving-for-blackstone/?mod=yahoo_hs

 

In some respects, this is good news, as it indicates that the platform is solid, just as Michael Dell said at Dell World. 

 

Onwards.

 

It only makes sense to continue M&A.  M&A is simply a form of investment, when done properly.  If you have a solid base to build off of, you don't stop right there -- you utilize that to build a beautiful structure.

 

Do we lament the fact that IBM even today continues M&A?  No, we do not.  Well, at least I do not.

 

For big tech, M&A is a necessity.  And if DELL truly wants to be come like IBM, they will never stop their M&A.

[bmichaud]

Good IT Hardware note by Deutsche Bank.

IT_Hardware_DB_Note_12.13.12.pdf

[ourkid8]

Makes sense.  I was looking for more organic growth with tuck in acquisitions.  I prefer the company stays away from anything transformational as we do not want an Autonomy or EDS in the future. 

 

Dell has spent more than $12.7B on 18 acquisitions since 2009.  (The Market Cap of Dell is $19B) I understand we were transitioning the company from a hardware focus to ESS but now let's hope we have a solid base going forward for organic growth.

 

S

 

If it is solid, why did they pledge to continue its "aggressive M&A activities."?  I cannot wait for the day the focus will not be on M&A but on organic growth! Slowly but surely this is turning into a baby IBM.

 

Tks,

S

 

Dells M&A head Dave Johnson is leaving to go to Blackstone.  He was one of the key architects to help turn around IBM into the power house that it is.  It is a huge loss for the company.  On brighter news, this has been a wonderful investment so far buying below $9! I cannot wait for the next round of share repurchases to begin...

 

http://blogs.wsj.com/deals/2013/01/07/dells-ma-head-johnson-leaving-for-blackstone/?mod=yahoo_hs

 

In some respects, this is good news, as it indicates that the platform is solid, just as Michael Dell said at Dell World. 

 

Onwards.

 

It only makes sense to continue M&A.  M&A is simply a form of investment, when done properly.  If you have a solid base to build off of, you don't stop right there -- you utilize that to build a beautiful structure.

 

Do we lament the fact that IBM even today continues M&A?  No, we do not.  Well, at least I do not.

 

For big tech, M&A is a necessity.  And if DELL truly wants to be come like IBM, they will never stop their M&A.

[alwaysinvert]

http://www.forbes.com/sites/patrickmoorhead/2012/12/27/dells-end-to-end-enterprise-play/

 

Mood around Dell shifting a bit it seems.

[T-bone1]

Good article today on how Cisco is desperately trying to catch up in the network security space and is likely to spend billions of dollars trying to do so.  I think this lends some credence to the idea that Dell is building value through its M&A activities:

 

http://www.reuters.com/article/2013/01/14/cisco-security-idUSL1E8NJ3RB20130114?type=companyNews&feedType=RSS&feedName=companyNews&rpc=43

 

"Rothman pointed out that SonicWall would also have been a target for Cisco but it was bought by Dell last year . . . Instead of adapting, Cisco was "resting on laurels" with legacy products in a rapidly changing market, Ho said."

[orion]

Dell up 11% any news?

[valueinvesting101]

http://www.bloomberg.com/news/2013-01-14/dell-is-said-be-in-buyout-discussions-with-private-equity-firms.html

[orion]

Thanks valueinvesting101!

[T-bone1]

Anyone have any thoughts on the following:

 

1) changes of a deal going through?

 

2) what the initial and/or ultimate price will be?

 

I am of the opinion that a deal is likely to go through, considering Michael Dell owns a large stake and have $10 billion + in other wealth.

 

If they try to do this below $16, I think they will have a tough time, given that the company spent billions on buybacks at that level, and that Longleaf will fight them tooth and nail

[bmichaud]

30-day average closing price was $10.57. 30, 40 and 50% premium to this is:

 

$13.74

$14.79

$15.85

 

Dell_Daily_Closing_Prices_Last_30_Days.xls

[alwaysinvert]

My initial thinking is that that is not a very big jump if the news is true.