THE DOINGS OF DELL

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In 2013 Michael Dell took his company private and has since orchestrated a merger with EMC Corp.  The thinking at the time was that that was probably a bad idea.  However, Dell is now on track to generate more than $90 billion in annual sales for its current fiscal year, which compares quite favorably with $57 billion when the company left the public stage.

Dell would thus rank as the fifth-largest tech company, just below Microsoft, which has just passed the $100 billion mark.  Hewlett Packard, however, has shown that size can sometimes be a hindrance and, having come to that conclusion, worked to divide itself into two smaller companies.  Dell appears to have a better mix of businesses than HP, as evidenced by its overall revenue rise of 18% year-over-year to $44.3 billion for the past 6 months.  With the economy doing so well, the company is benefitting from strong PC sales as well as server revenue that jumped 34%year-over-year.  And, EMC’s high-margin data storage business has added to the overall profitability of the company as well as providing strong cross-selling opportunities.  So, Michael Dell is betting that it’s a good time to take the company public again – and is hoping that the holders of his tracking stocks agree.  Dell learned a lot from his last stint as a public entity, and I’d guess that he has a good handle on the secret sauce that makes a company do well in that environment.

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