Michael Dell said that since going private, “I think about 20 percent of my time has been freed up.” He said, “You think about all of the time spent dealing with governance and preparing for investor activities and dealing with various shareholder requests… This can be quite distracting, right, if you try to grow a business.”
On whether more public companies should go private, Dell said, “I’ve had quite a few of them contact me and ask me about how we went through the process and what it was like and that sort of thing. It certainly wasn’t an easy thing to go through the process, once we got through it, it’s been a lot easier managing the business as a private entity.” On the companies who have contacted him for advice on going private, Dell said, “Some in Dell’s size range, some a little larger, quite — a lot more smaller than Dell. But I’d say more than 10.”
Michael Dell: Growth Rate Accelerating as Private Company
ERIK SCHATZKER, BLOOMBERG TV HOST: Well, let’s begin with the obvious. I gather you love being private.
MICHAEL DELL, FOUNDER AND CEO, DELL: You know, we’re enjoying the freedom and flexibility we have as a private company. We are not bound by 90-day periods. We’re focusing on our future out several years from now.
And we have an enormous opportunity and we’ve had a great year. We’re growing our — all of our businesses, all of our businesses are performing quite well relative to the industry. And it’s just a lot easier to focus 100 percent on our customers.
SCHATZKER: Not have to worry about the investors?
MICHAEL DELL: There you go.
SCHATZKER: Is it that different, being private versus being public? You’ve had it for a year now.
MICHAEL DELL: I think about 20 percent of my time has been freed up.
MICHAEL DELL: yes.
SCHATZKER: Twenty percent of a CEO’s time?
That’s pretty remarkable.
MICHAEL DELL: Well, you think about all of the time spent dealing with governance and preparing for investor activities and dealing with various shareholder requests. If I watch your show, I see the constant discussion of should there be a bigger dividend, should there be a share repurchase, should they spin off this, should they split off that, should they merge with this?
This is really — can be quite distracting, right, if you try to grow a business, right, so…
SCHATZKER: Well, that leads us to a pretty obvious question, which is you partnered with Silver Lake. There are lots of other private equity firms that have tons of capital and great access to financing who could partner with other public companies. Should more public companies go private?
MICHAEL DELL: Well, that’s for them to decide. I’ve had quite a few of them contact me and ask me about how we went through the process and what it was like and that sort of thing. It certainly wasn’t an easy thing to go through the process, once we got through it, it’s been a lot easier managing the business as a private entity.
We can take on risk. We can accept risks and invest more aggressively. And it’s — I think you could see some more, based on the discussions that I’ve been having with some other colleagues.
SCHATZKER: You have intrigued me. How many companies are — I’m curious if you could put a little detail on it. How many companies have you talked to about doing the kind of transaction that you did? And are we talking about companies of the size of Dell, $27 billion or even larger?
MICHAEL DELL: Some in Dell’s size range, some a little larger, quite — a lot more smaller than Dell.
But I’d say more than 10. But obviously I can’t tell you who they are.
SCHATZKER: Do you blame activism? Let’s put it this way. You tangled with Carl Icahn and Southeastern in the course of taking Dell private and that has given you a taste of activism. Do you blame activism for what’s happening to some of your competitors, HP, for example, splitting into IBM under tremendous pressure from investors for not being able to grow revenue and perhaps doing the wrong things with its capital?
MICHAEL DELL: I think there are two lenses that one should apply to these various moves that are being made. And the first is to say is this something that’s actually good for the customers of the enterprise? And often cases, the answer is no.
And then the second lens question would be if you owned all of the business, would you actually do this?
And of course there’s activism is a bull market strategy. And there’s a risk that the temporary nature of that shareholder who’s renting those shares for a period of time, it certainly benefits during that short period of time.
But what happens later on? And that’s a risk and certainly as a long-term owner-operator of business, I’m thinking about this over a lifetime and beyond.
SCHATZKER: So what do you say to the growing number of public company directors who are popping up and occasionally even members of management that were — there are far fewer of those — who say activism is a healthy influence on corporate America. It’s bringing discipline to management. Is that totally disingenuous?
MICHAEL DELL: Well, I’m not saying it’s all bad and I’m sure there are good ones and I’m sure there have been plenty of good things that have happened as a result of it.
But anything taken to an extreme can be a bad thing, right. And I think there are some bad examples in addition to probably some good ones.
SCHATZKER: John Phelan, who manages your money, whom I met last year, told me at the time that you could have financed your LBO on your own without Silver Lake. Should you have in retrospect?
MICHAEL DELL: Well, the nature of the process really lent itself to ensuring that there was another party involved beyond me and the independent board of directors went through this very rigorous process. There were actually multiple go shops, as you recall; you guys reported on quite extensively and I think it was about the most rigorous process ever conducted.
And it was, in revenue terms, the largest company ever to go private.
SCHATZKER: Let’s talk about the business. How quickly is your industry growing, the markets you serve and how’s Dell doing against that?
MICHAEL DELL: We’ve been able to accelerate our growth rate. And we’ve been investing. We’ve had seven quarters now in a row of share gain. Here in the United States in the last quarter in our client business, we grew 19.7 percent. The total industry grew only 4.7 percent. But if you take Dell out of the total industry, the rest of the industry grew only 0.2 percent. So 19.7 percent for Dell; 0.2 for the rest of the industry.
All of our businesses are growing and profitable. We’re investing in R&D; we’re adding new customers. And so today we are the fastest growing large integrated I.T. company in the world. So we’ve materially