Dell has reported second quarter revenue of $14.5bn, flat year on year, with a continued decline in PC sales.
For its fiscal 2014 second quarter results, the company’s Enterprise Solutions, Services and Software (ES&S) division reported revenue of $5.8bn, a 9% increase year on year, boosted by the $2.4bn acquisition of Quest Software. But in the End User Computing division, revenue was down 5% compared to the same period last year.
Operating income for the quarter was $205m, a 71% decrease. Dell desktop and thin client revenue increased 1%, mobility revenue declined 10% and revenue for software from third parties and peripherals declined 5%.
The company’s founder Michael Dell has partnered with private equity firm Silver Lake in a bid to take Dell private. Shareholders will be asked to vote on the deal on 12 September. But activist investor Carl Icahn is against the plan, and has launched a legal challenge relating to how shareholders that abstain from voting are counted.
“In a challenging environment, we remain committed to our strategy and our customers, and we’re encouraged by increasing customer interest in our end-to-end solutions offerings and continued growth in our enterprise solutions, services and software businesses,” said Brian Gladden, Dell chief financial officer.
The latest figures for PC shipments across Western Europe from Gartner showed that year-on-year the market had declined by 19.8% to 10.9 million units being sold, with desktops and laptops down in both business and consumer categories. Dell is the second biggest PC company in the UK. According to Gartner, its market share declined 1.2% during the second quarter.
With a shareholder vote scheduled for July 18, the battle over Dell’s $24.4
billion plan to go private intensified Friday as investor Carl Icahn and his
affiliates issued an enhanced offer for the company.
Icahn and his partner, Southeastern Asset Management, issued a letter to Dell
shareholders offering a warrant to buy a share in the company at $20 over the
next seven years for every four shares that they sell now. Icahn’s plan calls
for part of the company to continue to be publicly traded.
The new offer is in addition to the previous proposal to buy shares at $14
each. Making the calculation that shares will rise over $20 once the suggested
proposal and new management is in place, Icahn said in the letter that the
entire deal is potentially worth $15.50 to $18 a share for current shareholders.
In the letter, Icahn said that he and Southeastern are “completely committed
to bringing in management that we expect to be far superior to Michael Dell who
we believe has had an abysmal record during the last three years. We believe
there would be several excellent candidates for this position who would be very
interested in running this company once a clear mandate has been established.”
Michael Dell and his affiliates, Silver Lake Partners, are offering $13.65 in
cash per share. Dell is betting that as a private company, free from the
pressure of Wall Street scrutiny, it will have more room to execute its strategy
to push into high-margin products and services and move away from the
floundering PC market.
For the buyout plan to go through, it needs to be approved by 50 percent of
shareholders not including Michael Dell. This amounts to investors holding a
total of 42 percent of the company.
With the shareholder vote looming, the battle over Dell’s future has ramped
up recently.
Earlier this week, Icahn pressed shareholders to exercise appraisal rights on
the company’s value. The appraisal would require a Delaware state judge to issue
an opinion on the company’s worth. It could also derail the deal.
Dell responded to Icahn’s suggestion for the appraisal with a scathing
statement of its own.
“Pursuing appraisal involves substantial risks and costs,” Dell said. “If a
sufficiently large number of shareholders seek appraisal and thus do not vote in
favor of the acquisition (which is required to pursue appraisal rights), the
merger agreement will be terminated, the merger will not occur, stockholders
will not have the opportunity to receive the $13.65 per share cash merger
consideration, there will be no appraisal rights, and stockholders will continue
to bear the risks of holding their Dell shares. “
In addition, Dell pointed out, there is no assurance that a judge would value
the company greater than what Dell is offering.
There is also no assurance that any new management that Icahn brings in would
perform better than Michael Dell.
Three shareholder advisory groups this week, including Institutional
Shareholder Services, advised shareholders to vote for the Dell buyout plan. The
plan assures shareholders of a definitive value for their holdings and
eliminates risks associated with Icahn’s proposal, they said.
“ISS recommends clients vote FOR this transaction, which offers a 25.5%
premium to the unaffected share price, provides certainty of value, and
transfers the risk of the deteriorating PC business and the company’s on-going
business transformation to the buyout group,” ISS said Monday.
The other advisory groups recommending the Dell plan were Egan-Jones Proxy
Services and Glass, Lewis & Co.
Over the past month, reports have surfaced indicating that Silver Lake was
getting second thoughts about the deal, as the PC market worsens. However, Dell
officials said Friday the vote is set to go ahead as planned. Dell had no
comment on Icahn’s new offer Friday.
Dell shares closed Friday at $13.32, down by $0.03 for the day, on a
generally up day for the markets.
The government has saved £500m by controlling spending on IT and digitising a
number of its services.
The claim was made in the latest report from the Efficiency and Reform Group
(ERG), formed by the coalition to cut the UK deficit and run by Cabinet Office
minister Francis Maude and chief secretary to the treasury Danny
Alexander.
The update said overall spending by the government had been reduced by £10bn
– 82% higher than the previous year – with IT coming into play in a number of
areas, sticking with the ERG’s initial pledge to “increase digitisation and the
use of alternative delivery models” to save money.
IT spend controls and moving government services and transactions onto
digital platforms accounted for £500m of the figure, but almost £2bn was also
saved in procuring common goods and services, and renegotiating large government
contracts – which would have involved IT spend.
The report also highlighted a £126m saving through using framework agreements
for telecoms services and a further £42m from merging the DirectGov and
BusinessLink websites into gov.uk – which it claims now receives one million
hits each day.
Computer Weekly asked the Cabinet Office if the telecoms spend was
specifically saved thanks to the PSN framework, but it had not answered our
question by the time of publication.
The ERG said it aspired to cutting back even more costs in the coming years,
aiming for annual savings of £20bn by 2015.
“We are working with government departments and focusing on getting more for
less,” read the report. “We have achieved significant savings without affecting
front-line services. We will continue to find ways to improve services, work
smarter and unlock large savings.”
Russ Kremer with some of his hogs on his farm in Frankenstein, Mo., in 2009.
Instead of buying conventional feed, Kremer grazes his hogs in a pasture, and
grows grains and legumes for them.
Peanuts, flax, sprouts and avocados: It's not the menu at a health food deli,
but the menu inside some barns. What's more, many farmers experimenting with
these gourmet feeds are growing the ingredients themselves.
Take Russ Kremer, the Missouri pig farmer whose operation served as the
inspiration for the 2011 Chipotle ad. Kremer hasn't bought commercial animal
feed in 30 years. Instead, he grazes his hogs in a pasture, and grows (or buys
from neighbors) grains and legumes to supplement their nutrition.
Kremer and some of the other farmers developing specialty feed say they are
willing to shoulder the extra cost and time to produce it because they're turned
off by conventional feed mixes. The conventional mixes are what most of the hogs
in the U.S. consume, and can include commodity corn and soybeans, blood protein,
animal waste and rendered fats, according to Kremer.
Kremer also runs a co-op where farmers can pool resources to mill their own
feed. "We opt for grains like barley and oats as often as possible, because most
corn and soy is now [genetically modified]," he says.
The scarcity of non-GMO corn and soybeans is what led hog farmers Kelley and
Mark Escobedo of South Texas Heritage Pork to experiment with peanuts.
Using their own 1950s-era mill, the farmers combine peanuts, peanut hay, and
oats to boost the animals' protein intake and overall health — especially
important because they raise their animals without antibiotics. The resulting
meat has a delicate, nutty flavor that has helped them attract a loyal customer
base willing to pay a higher price for the meat. "I've never had anyone come
back and say it's not worth it," says Escobedo.
She and other farmers even take custom feed requests. Case in point: One
restaurant shaped a special meal around a single hog that the Escobedos fed
avocados (along with the peanut-based feed) for the last 6 weeks of its
life.
"The meat was soft and delicious," Escobedo recalls. "It was the most
delightful dinner I've ever eaten." (Pot-fed pigs are getting similarly rave
reviews in Washington state, as we've reported.)
Farmers are supplementing animal feed with other ingredients found in gourmet
kitchens, too. To boost his animals' immunity, Kremer uses oregano oil. To add
omega-3 fatty acids, many cattlemen are adding the superfood flax to feed. And
Nigel Walker of California's Eatwell Farm not only grows his own wheat to feed
his egg=-laying hens, he also sprouts the grains for added nutrition.
Even as farmers learn to market meat from animals raised on special diets,
only a small percent of consumers are willing to pay extra for it. A pastured
chicken fed with homegrown grains, for instance, can cost as much as $20 to 25,
compared with $10 for a conventional chicken in the grocery store.
The cost to farmers, in terms of both dollars and time, also remains
significant. Kremer says he can afford homegrown feed because he saves money on
veterinary care since he doesn't use antibiotics. His pigs also have a higher
survival rate than average (just 1 percent mortality compared to nearly 5
percent industry-wide). But his operation is also much smaller than average, so
the risks are different from a large hog operation.
Jack Lazor, author of the forthcoming book The Organic Grain
Grower, and owner of Butterworks Farm in Vermont, says homegrown
animal feed has fundamentally transformed his farm. Lazor supplements his dairy
cows' diets with homegrown grains and feeds his laying hens kelp and soybeans he
grows and roasts himself, using a recipe developed by Polyface Farm's Joel
Salatin. The birds gain more weight, and the eggs are yellower, but more
important to Lazor is the sense of being in complete control of what he calls
the "craft of farming."
"When you're feeding an animal you can tweak it one way or the other based on
the herd or the season," he says. "Plus, it just adds more meaning to your
life."
Warren Spector is a name known well by dedicated PC gamers. The man helped make innovative games like System Shock, Deus Ex and Thief. More recently, Warren Spector worked with Disney Interactive on Disney's Epic Mickey games. With Disney shuttering his Junction Point Studios, Spector is taking a vacation for the first time in his life.
But he’s keeping busy with speaking engagements and going back to school, designing a game development program for the University of Texas Austin. Now free of public relations restrictions, Spector opens up to us about game development and his own future in this exclusive interview.
Game On: You’ve partnered with Blizzard’s Paul Sams to create the Denius-Sams Gaming Academy at the University of Texas. What’s it going to be like to teach the next generation of game makers?
Spector: For 30 years I’ve been arguing for the need to take a more structured approach to training the next generation of developers; it’s important to teach them what makes games work. Now, it’s much easier to convince people that games education has a place in the colleges and the universities in the country.
How will your Denius-Sams Gaming Academy differentiate itself?
We want to take the best candidates and put them through a rigorous boot camp approach to actually making games. It’s not about games as art—although I believe that—and it’s not about games made by four people who sit in a room and talk.
The University of Texas at Austin College of Communications, future home of the Denius-Sams Gaming Academy.
Games are an industrial art and the way Disney and Electronic Arts and all the other places I’ve worked at actually work is not the way most universities teach game development. We want to take those 20 people and actually prepare them very specifically for a career in creative or production leadership.
What opportunities are there for graduating game developers today?
Games offer a terrific career opportunity for people who have the passion and dedication and don’t mind the hard work. The major players are laying people off right and left now; even my studio just got shut down recently. But that doesn’t mean there aren’t opportunities in game development.
There are still thousands of people working at major publishers and every time a studio shuts down a thousand flowers bloom. You see a group go the indie route, which is now a much more viable space to be in than it was five years ago. Others go the mobile route, which is more viable and it didn’t even exist five years ago. So there are still plenty of job opportunities.
What advice would you give to someone who wants a career in games?
First of all, make games. If you’re not making games on your own, the odds are very slim you’re going to be able to do it professionally. No one’s going to give you a chance unless you have a portfolio of some kind.
For its fiscal 2014 second quarter results, the company’s Enterprise Solutions, Services and Software (ES&S) division reported revenue of $5.8bn, a 9% increase year on year, boosted by the $2.4bn acquisition of Quest Software. But in the End User Computing division, revenue was down 5% compared to the same period last year.
The company’s founder Michael Dell has partnered with private equity firm Silver Lake in a bid to take Dell private. Shareholders will be asked to vote on the deal on 12 September. But activist investor Carl Icahn is against the plan, and has launched a legal challenge relating to how shareholders that abstain from voting are counted.
The University of Texas at Austin College of Communications, future home of the Denius-Sams Gaming Academy.