There are a lot of arguments about where the DELL deal will ultimately be priced, but so far I haven't seen anyone talking about earnings multiple for valuation.
At $13.7x the PE is under 9.5
I don't understand why a price tag that is less than 10yrs of earnings is reasonable even for the brand name. Dell is a sustainable business with growth opportunities, has a strong brand, and excellent industry connections. Why would anyone think that 10 times earnings is reasonable. 15 or 20 times makes a lot more sense.
I still think the stock peaks around 20 and the firm is sold in the $15-17 range.
Can anyone help me understand why this should be done at such a low multiple?
Anyone have an idea of what they think would be a fair multiple?
It shouldn't and it won#$%$ easy to recognize that Michael Dell is frustrated and doesn't know what to do,
so he figures I can do it myself if the price is right. That is why he is making such a ridiculous offer.
If the Board of the Directors actually had the shareholders interests at heart and carried out their
fiduciary responsibilties they would immediately declare a revised dividend program of $.25 quarterly
or $1 annually per share. This would have the effect of causing the shares to increase to the $20 - $30
range, and at the same time allow Michael Dell the needed breathing room to carry out his turn-around
Dell has the cash. By the way, this is shareholders cash. Use it or lose it to Michael or another raider.