Thanks for sharing this great write-up. One question that I’m having trouble figuring out is the operating income for the core integration biz. The 10-K reports operating income of procurement + integration together.
Do you have any idea what the split is between EBIT for both? Given how lumpy & unpredictable procurement services, I’m trying to value the business of EBITDA ex procurement.
I have gotten very many messages on this. Someone contacted me on Twitter and is meeting with management about this very soon. I will report back. I think that one thing is certain—integration is going to be a higher margin business than procurement once both are mature and "up to speed". This is true across most industries I have studied and also makes logical sense.
Do you know who are the other Dell partners that does this and what the economics look like? I'm surprised with a team of 80 people Dell doesn't just hire 80 people and do this. Even more surprising Darryll joined instead of taking all his old contacts from Dell.
Is there anything stopping someone else from coming in and saying to Dell they'll do it for less / customers going directly to Dell?
I'm quite busy these next few days, but let me publish an update soon (hopefully this weekend or early next week) diving into these points. On the acquisition point, I think the lawyer and integration costs aren't worth it for a $12m MCAP (could be a few $m). And I think mgmt thinks they'd make more money growing organically—given the opportunity—as this post touches on. I don't think Dell would want to offer fair value + synergy premium which would be like 3x mcap or something.
A 4x in 4 years? What a load of rubbish. 7x in 3 months. Your predictions stink.
xD
10x now. the 4x in 4 years really isn't aging well.
I bought this stock and it is up 84% in a month or so.
Thanks for sharing this great write-up. One question that I’m having trouble figuring out is the operating income for the core integration biz. The 10-K reports operating income of procurement + integration together.
Do you have any idea what the split is between EBIT for both? Given how lumpy & unpredictable procurement services, I’m trying to value the business of EBITDA ex procurement.
You and everyone else :)
I have gotten very many messages on this. Someone contacted me on Twitter and is meeting with management about this very soon. I will report back. I think that one thing is certain—integration is going to be a higher margin business than procurement once both are mature and "up to speed". This is true across most industries I have studied and also makes logical sense.
Makes sense. Thank you!
Thanks for writing this up, super interesting.
Do you know who are the other Dell partners that does this and what the economics look like? I'm surprised with a team of 80 people Dell doesn't just hire 80 people and do this. Even more surprising Darryll joined instead of taking all his old contacts from Dell.
Is there anything stopping someone else from coming in and saying to Dell they'll do it for less / customers going directly to Dell?
I'm quite busy these next few days, but let me publish an update soon (hopefully this weekend or early next week) diving into these points. On the acquisition point, I think the lawyer and integration costs aren't worth it for a $12m MCAP (could be a few $m). And I think mgmt thinks they'd make more money growing organically—given the opportunity—as this post touches on. I don't think Dell would want to offer fair value + synergy premium which would be like 3x mcap or something.
Great - looking forward to it. Agree with you on the Dell acquisition