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What's Old Is New Again

Founded in 1984, This Company Is Making Headlines Again

Hi Everyone πŸ‘‹,

It’s time for our GRIT Monthly Stock Deep Dive!

Stock Deep Dive: Dell Technologies (DELL-US, $95.1B MCAP)

Every once in a while, a company comes back to life. Some companies do this through a strategic shift, a reorganized capital structure, or a focus on long-term growth and transformation. This company did all the above.

It’s’ not that this company was ever really dead, just stuck in the mud.

It went through several alternating public and private stages as the Founder/CEO/Chairman imposed his iron will to get the company on the best path possible.

This company is looking towards its next act in its storied history.

Can it undergo yet another transformation?

Let’s find out!

  • History πŸ‘‰ Origin β†’ Public β†’ Private β†’ Public

  • Overview πŸ‘‰ What Does Dell Do?

  • Why Now? πŸ‘‰ Dell’s AI Revival

  • Most Recent Earnings πŸ‘‰ Dissecting the AI Opportunity

  • By The Numbers πŸ‘‰ Key Metrics

  • Risks πŸ‘‰ Potential Pitfalls

History πŸ‘‰ Origin β†’ Public β†’ Private β†’ Public

Origin: Dell was founded by Michael Dell on February 1, 1984, in Austin, Texas. Initially operating as "PC's Limited," the company aimed to provide custom-built computers directly to customers, bypassing traditional retail channels.

IPO #1: Dell went public on June 22, 1988, with an initial public offering (IPO) priced at $8.50 per share. Throughout the late 1980s and early 1990s, Dell expanded its product line to include laptops, servers, and workstations, solidifying its position as a leading PC manufacturer.

The Glory Days (1990-2000s): Dell introduced various innovations, including the industry's first notebook with a built-in CD-ROM drive and the first to offer online sales. By the late 1990s, Dell had become the world's largest PC manufacturer.

Dell's revenues soared, reaching over $25 billion by 2000. The company's efficient supply chain and build-to-order model enabled it to maintain competitive pricing and high customer satisfaction.

Dell began diversifying its offerings to include enterprise solutions, such as data storage, networking, and IT services, expanding beyond its core PC business.

The Shift (2000s): As the PC market matured and faced saturation, Dell encountered increased competition and pricing pressures. To address these challenges, Dell made several strategic acquisitions, including Perot Systems in 2009, to strengthen its presence in the enterprise solutions market.

Going Private (2013): In February 2013, Michael Dell, in partnership with Silver Lake Partners, announced plans to take the company private. The move aimed to enable Dell to focus on long-term transformation without the pressures of public market scrutiny. The buyout was valued at $24.4 billion, with shareholders receiving $13.75 per share in cash plus a special dividend of $0.13.

The transaction was completed in October 2013, marking the largest leveraged buyout since the financial crisis 2008.

Transformation and Return to Public Markets (2013-2018): Dell focused on transforming into a leading provider of end-to-end IT solutions as a private company. Key acquisitions included EMC Corporation in 2016, creating Dell Technologies, the largest privately controlled tech company.

Dell returned to the public markets in December 2018. Dell achieved this instead of a traditional IPO by buying out the tracking stock (DVMT) tied to its stake in VMware. The transaction was valued at approximately $24 billion, with DVMT shareholders offering cash or Dell's Class C shares.

Overview πŸ‘‰ What Does Dell Do?

Today, Dell Technologies is a leading provider of IT infrastructure, software, and services, serving customers of all sizes across various industries.

Dell provides cloud computing, cybersecurity, and artificial intelligence products, aiming to drive digital transformation for its customers worldwide. They divide their operating segments as follows:

Client Solutions Group (CSG): This segment delivers hardware products, particularly personal computers, notebooks, desktops, and peripherals. It is divided into two primary sub-segments:

  • Commercial: Catering to business customers, including large enterprises, small and medium businesses, and public institutions.

  • Consumer: Focusing on individual consumers and home office users.

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