What's Important in the Financial World (1/17/2013)

Online shoppingMichael Dell and the Dell Buyout

Private equity firm Silver Lake Partner's rush to fund a buyout of Dell Inc. (NASDAQ: DELL) has accelerated. And investors begin to ask if founder Michael Dell has a conflict of interest between his role as CEO of a public company and his role as a possible buyer of that company. Bloomberg reports:

Silver Lake Management LLC and partners are close to lining up about $15 billion in funds for a buyout of Dell Inc. (DELL), the third-biggest maker of personal computers, said people familiar with the matter.

Lenders including Credit Suisse Group AG, Royal Bank of Canada, Barclays Plc (BARC) and Bank of America Corp. may informally disclose terms to a small group of possible buyers of the bridge loan as soon as today, said one of the people, who asked not to be named as the process is private.

The Wall Street Journal writes:

As founder, CEO, 15.7% owner and company namesake, Dell the man has outsize influence on Dell the company.

Reports say Mr. Dell is playing a role in the transaction and contributing his stake to the deal, and two people familiar with the matter say Mr. Dell initiated the idea. The involvement will eventually get shareholders wondering where his allegiances lie. Is he a buyer, a seller, or somewhere in between?

Cheaper Chevy Volts Coming

General Motors Co. (NYSE: GM) said it will offer better prices on the next generation of Chevy Volts, the car company's flagship electric car. Since almost no one buys Volts now, the improvement may not mean much. According to USA Today:

General Motors' plug-in electric Chevrolet Volt will get "thousands" cheaper when the time comes for its next generation, a top GM executive says.

Instead of shoehorning the electric powerplant into a conventional GM compact-car platform, the next Volt will be purpose-built. That will allow the ability to better package the batteries and other specialized components, says Mark Reuss, president of GM North America.. He spoke Wednesday night at Automotive News' World Congress here in Detroit.

"The next generation will be even better," he vowed. And, if it is purpose-built, there are "thousands of dollars that can come out of it."

Growing Pessimism About EU Economy

The brief optimism that a resolution to financial problems in the European Union would begin a process that would resurrect the economy is over. Both economists and national leaders believe that low consumer demand, unemployment and austerity measures that have killed efforts by governments to rekindle growth have taken an ongoing toll. According to Bloomberg:

The euro-area economy won't return to growth until the next quarter as a recovery in Italy is delayed and France continues to shrink, according to a survey of economists.

Gross domestic product in the 17-nation region will stay unchanged this quarter, before rising 0.1 percent and 0.2 percent in the second and third quarters, the median forecast in a Bloomberg News monthly survey showed. GDP probably fell 0.4 percent last year and will decline 0.1 percent in 2013.

The survey follows a downbeat assessment by European Central Bank President Mario Draghi last week when he said that while the euro-area crisis has eased, "we are not at all seeing an early and strong recovery." The 17-nation region's economy last grew in the third quarter of 2011 and remains under pressure from government budget cuts and weak confidence. Goldman Sachs Group Inc. says authorities need to resolve the debt turmoil "fully" to encourage growth.


Filed under: 24/7 Wall St. Wire, Market Open Tagged: DELL, GM

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