Thursday, 25 July 2013

The Dell Story

On an average day, I probably spend twenty minutes looking over general business news from across the globe.  I admit....a guy from Bama.....probably ought to have better things to do with his time.

There are always simple business stories that I tend to spot.....which won't get explained by CNN or Fox, or by the local newspaper.

Today, Dell and it's woes.

You see Dell has stumbled around the last couple of years and would really like to put themselves in a better position.  There's a purchase deal out there....for the original developer of the company (he sold off years ago and made his millions), to step in and buy the company back.....and run it.

The stock price now?  $12.92.

Twelve years ago?  Around fifty bucks a share.  Yeah, it's stumbled a good bit since 2008.

The former owner would like to offer $13.75 to get the shares he wants.

The problem?  Well.....there hasn't been enough proof that stock-owners would accept the deal.....thinking that a sweeter deal could come along at $15 or $18 a share shortly.  Course, this frustrates the former owner when he's trying to make the deal final.

So Dell's work under the table?  Well, they've come to agree that there are three types of votes for this stuff: accept it, decline it, or abstain.

Small-time owners of stock....the guys who own 100 shares or a 1000 shares.....typically get this envelope in the mail, and half the time.....decline to vote.....meaning to abstain.

The former owner has figured out the quantity of such abstains, and he wants them tossed out.  Either you vote to accept or decline, and in such a case.....he would have just enough votes to accept his deal and that would end the mess.

Changing the abstain rule?  Well.....it's not something that you tend to do with stock operations.  Abstains usually count as abstains, end of the story.

You can smell legal trouble brewing here.  The guys who hate the former owner and the hedgefund folks.....would challenge tossing out abstain votes.

The real problem?  Thousands....if not tens of thousands of stock owners....who only own a small quantity of shares, and they just won't participate or share in the misery of the company.  They stand there with shares and act with some status symbol on their shoulder.....but the truth is.....they just don't care enough about the company to say "yes" or "no".  So they are worthless as stock-owners.

Complexity

I hate complexity.  The mere idea that it takes thirty-two steps to make a perfect home-made chocolate cake just infuriates me.  The idea that it takes twenty-two hours of my personal time to do my yearly income taxes.....infuriates me.  The idea that it takes fourteen forms to buy and license a new car....infuriates me.  The idea that I have to show a form of ID (at age 54) to buy a bottle of Japanese beer at the local grocery.....infuriates me.  The idea of my insurance guy wanting to come by and try to sell me some packaged lifestyle insurance deal, which requires two hours of talk to get me to a point of grasping the whole deal.....infuriates me.

So I come to ObamaCare, with the 2700 pages of law passed by Congress, and almost twenty thousand pages of regulation written to make this all work.

If the Bible folks had written up the book and it was 2700 pages long.....no fool would have ever read it.  Moses could have been chased ten miles down the mountainside with those tablets by a dragon, Mathew could have fallen in love with some Egyptian lusty queen who dressed in fancy green pajamas, and Revelations could have gone into detail about the Yankees winning the World Series with lowest payroll in baseball history as the end-of-all-times details, and it wouldn't matter.....no one would read it.

If Toyota told you that the owners manual for your new SUV was 2700 pages long......you'd stop the purchase and retreat back to a Buick.

If Sony said that the operators manual for that new 60-inch TV was 2700 pages long.....you'd stop the guy, return the TV, and try bring the old TV out of the garage and put it back in the living room.

If the school told that this year they are introducing 2700 pages of student regulation and rules.....you'd remove Clarence from the school and try talking to those Catholic nuns again about accepting him in their private school.

If the Yosemite National Park folks said you were OK to camp out in their camp-grounds but you'd need to read their 2700 page safety manual first.....you'd just skip the deal and camp out in the Badlands.

If the Baptist minister college said they'd accept you with free-tuition, but you'd need to read their 2700 pages of rules and regulation.....you'd give up that minister idea and go back to diesel mechanics school.

If the state updated their list of marriage rules and laws (going from 2 pages to 2700 pages) and you had to read them before applying for a license.....you'd tell your future spouse that you don't have time to waste on such foolishness.  You'd just as well stay single.

If a bunch of guys met up around Philly and determined that they'd conceive some new government, with a 2700-page Constitution.....most folks would stand and say they'd just rather stay with the king-concept and make it simple.

The single reason why ObamaCare ends up being a failure?  No one can truthfully explain in any simplicity.  They now talk of thousands of experts being hired by the government and the states....to act as some authority over your choices of health insurance.

The idea that any portion of society will be accepting of the advice given?  I'd put the numbers at less than twenty percent.  The natural tendency of Americans to disbelieve advice given is substantial.  When some guy is trying to sell you a car.....you have real doubts over his version of the truth.  The same is true for investment advice, or TV advice, or life insurance advice.

Yeah, we've take something and made it so complex.....that we are frustrated and infuriated about the situation.  We can even ask the idiots who voted for the package to explain it to us.....but they mostly just grin and start talking about tax reform, social security reform, or more road money for our state.

In the end, you will be standing there....wondering if it's easier to explain the ObamaCare program or nuclear physics.