The Buyout of the Century

It’s official:

Dell shareholders voted on Thursday to approve the computer maker’s $24.9 billion sale to its founder, ending a monthslong slog that included fierce opposition from some investors.

At a brief shareholder meeting at Dell‘s headquarters here, Alex J. Mandl, the head of a special Dell board committee, announced that a majority of shareholders had voted in favor of the sale to Michael S. Dell and the investment firm Silver Lake.

A person briefed on the matter said that roughly 65 percent of the shares that were voted approved the buyout.

The idea is, Dell needs time — time Wall Street won’t allow it — to reinvent itself as a services business. Can they do it, with the founder back at the helm and no demanding shareholders to please?

Michael Dell’s particular genius is actually for warehousing. This is the guy who built warehouses just outside his assembly plant, then charged his suppliers for storing their goods right up until he needed them for assembly. Dell, the company, didn’t take ownership of its computer parts until they left the storage facility Dell built and required its suppliers to use. It’s kind of an evil genius, really. Dell’s, the man, other secret was big volumes/narrow margins, but that’s not much of a secret at all.

Back in the mid-’90s, Dell once boasted — boasted! — that his company spent less than 1% of its revenues on R&D. This was back when Windows had become superior to any of Apple’s offerings, and PC makers could get away with slapping together cheap beige boxes. The original Bondi Blue iMac should have served as a shot across Dell’s (and HP’s and Compaq’s) bow that the times they were a-changin’. The introduction of OS X a few years later and Microsoft’s stumbles and delays getting “Longhorn” out the door should have re-sent the message louder and clearer. Longhorn of course turned out to be Windows Vista, fer cryin’ out loud.

By that time, Dell’s new Asian manufacturing “partners” were taking Dell’s lunch money.

The New Dell is going to have to move a lot faster, be a lot more imaginative, and sell quality services instead of cheap clones. I’m not sure the old Michael Dell is the man to do all that. So it seems smart for the company’s shareholders to in essence take the money and run.

I know I would have.