The Wall Street Journal | CIO Journal, October 31, 2014 article: "Michael Dell Sees Advantage in Rivals’ ‘Chaos and Frustration’" [Developing long term enterprise value without former shareholders]

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Forum participants were encouraged to consider appraisal rights in June 2013 as a means of realizing the same long term intrinsic value that the company's founder and private equity partner sought in an opportunistic market-priced buyout, and legal research of court valuation standards was commissioned to support the required investment decisions.

The buyout transaction became effective on October 28, 2013 at an offer price of $13.75 per share, and the appraisal case was initiated on October 29, 2013, by the Forum's representative petitioner, Cavan Partners, LP. The Delaware Chancery Court issued its decision on May 31, 2016, establishing the intrinsic fair value of Dell shares at the effective date as $17.62 per share, approximately 28.1% more than the offer price, with definitive legal explanations confirming the foundations of Shareholder Forum support for appraisal rights.

Each of the Dell shareholders who chose to rely upon the Forum's support satisfied the procedural requirements to be eligible for payment of the $17.62 fair value, plus interest on that amount compounding since the effective date at 5% above the Federal Reserve discount rate.

Note: On December 14, 2017, the Delaware Supreme Court reversed and remanded the decision above, encouraging reliance upon market pricing of the transaction as a determination of "fair value." The Forum accordingly reported that it would resume support of marketplace processes instead of judicial appraisal for the realization of intrinsic value in opportunistically priced but carefully negotiated buyouts.

Source: The Wall Street Journal | CIO Journal, October 31, 2014 article

THE WALL STREET JOURNAL.

CIO Journal.

October 31, 2014, 4:14 PM ET

Michael Dell Sees Advantage in Rivals’ ‘Chaos and Frustration’

By Clint Boulton

Reporter

Michael Dell, founder and CEO of Dell Inc., says going private has helped the company accelerate the delivery of new products to market and make strategic investments for customers. What isn’t clear is the extent to which Dell’s new focus on cloud systems, services, and software are resonating with CIOs.

Mr. Dell, in an Oct. 29 LinkedIn post commemorating the first anniversary of Dell’s $24.9 billion buyout, said going private freed up the company to focus on innovation. “We’re investing in our strategy, revving up our innovation engine and having a blast!” said Mr. Dell, who will meet with CIOs at the company’s annual customer event in Austin next week.

Mr. Dell has maintained going private would enable it to accelerate the expansion of its business beyond PCs and enterprise hardware to cloud systems, services and software. IDC market share numbers indicate Dell’s PC business has had seven straight quarters of growth and that its server business, which is ranked second in the market for x86 machines worldwide, remains strong.

More difficult to gauge is the performance of Dell’s cloud systems, which span the company’s enterprise hardware, software and service segments. The company declines to disclose cloud sales figures. But Dell is building private cloud systems with Red Hat Inc. and is reselling public cloud software from Google Inc. and Microsoft Corp. Dell also opened a website where customers can compare and shop for cloud software.

There’s no doubt that the timing of Dell’s decision to go private was propitious. Tech companies such as Hewlett-Packard Co. and eBay Inc. are breaking up, and EMC Corp. is under pressure to do the same, as activist investors demand higher returns. IBM Corp. is selling off its low-end server and chip businesses. Mr. Dell may be right that the company is making progress in private, although it is hard to have enough information to say for sure, which is of course part of the appeal of being private. Yet even if he is correct, it appears that Dell has some work to do in communicating the value of those efforts to CIOs.

“I feel like Dell is doing the same thing as all of the other providers… except they entered the market fairly late,” said David Chou, CIO of the University of Mississippi Medical Center. Mr. Chou, who is is evaluating similar software from Amazon Web Services, said he isn’t considering Dell’s cloud systems because the company have enough experience running health care software in the cloud.

Dell’s cloud, security and analytics software doesn’t stand out amid products other vendors are selling, said Gerry McCartney, CIO of Purdue University. He is planning to attend Dell’s customer event, where he hopes to learn more about the company’s strategy. “They’ve got to show that they can handle a major transformation.”

Regardless of how well Dell is doing in private, it’s pretty hard to imagine that things would be better for the company if it had remained in the public market.

Mr. Dell said that companies that break up their businesses to satisfy shareholders “create chaos and frustration” for customers. That opens the door for Dell to step in and earn new business, he said. “Every move we make, every dollar spent, every new product and service…they all start and end with what’s best for our customers,” said Mr. Dell.

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