Three days ago, when Dell (Dell) announced that it was going to release it first quarter earnings results five days earlier than originally planned, the street took it as a warning sign that bad news was sure to follow.
Even before the change, it wasn't as if analysts were expecting great things from the humbled and hurting computer-maker, but the haste shown in trying to get the latest report out has not only served to take low expectations even lower, but has stoked a fresh round of speculation over founder Michael Dell's effort to privatize the company.
As my co-host Jeff Macke and I discuss in the attached video, Dell's existence is hardly dependent upon whether it meets or beats analysts expectations or offers bullish guidance about the future. No, Dell's results are all about valuation, and the worse they look, they more likely it will be that any and all shareholders will see that the current cash bid (of $13.65 per share from Michael Dell and Silver Lake Partners) might not be as much of a steal as certain shareholders have inferred.
"They've shopped the company and there's been a lot of umbrage, a lot of outrage, a lot of 'Michael Dell is trying to steal the company'," Macke says, pointing out that there's a ''scoreboard" that keeps track of these things everyday called the share price. "And it turns out Dell is worth about $13.65," he says.
To be fair, there is a new, competing offer from a group led by Carl Icahn and Southeastern Asset Management that would replace the current board and management and give investors the choice of accepting an additional $12/share in stock or cash. While implying a much higher price, this offer has yet to be substantiated, accepted by management, and brought to shareholders.
In the meantime, the reality of eroding fundamentals makes the need for a deal more urgent, but also unlikely.
"No one wants it," Macke says. "It's like one of those sofas you put on the curb."