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I am not offering an opinion on the matter, so I don't know what you mean by me not taking into account risk. You were inferring things from the judge's verdict

I am not offering an opinion on the matter, so I don't know what you mean by me not taking into account risk. You were inferring things from the judge's verdict that were not correct and I was merely pointing them out. I don't know why you are trying to make this point about adjusting for risk when the entire question revolves around what the stock was worth at a stationary point in time three years ago. There is no risk basis to the calculation as discussed here - it's not a question of the judge possibly taking it into account or not, the judge absolutely did not factor it in. Whatever has happened in the world in the ensuing three years would not have affected this lawsuit either way.

dharmon 10y ago
> I don't know why you are trying to make this point about adjusting for risk when the entire question revolves around what the stock was worth at a stationary point in time three years ago. That you don't see how these two are connected is my point. Let me take a step back. The value of a company is the sum of the cash that can be taken out of the business in perpetuity discounted back to present value. A common mistake is thinking that you can nail this down to a precise figure. In fact, it is a range of potential values. Why? Because the future is uncertain, and those future cash flows are uncertain. In other words, there is risk involved. So in the optimistic scenario where everything in the business goes right, you get a high valuation. In a pessimistic scenario the valuation is lower. Which is correct? Nobody can tell from the outset. Now imagine you are doing a valuation for a business, but for the value of that business 3 years ago. You have had the advantage of seeing the trend those cash flows have taken the past 3 years, and whether you admit it to yourself or not, it will influence your valuation. That is all I am saying.
- joshdickson 10y ago
  > You have had the advantage of seeing the trend those cash flows have taken the past 3 years... And what exactly are those trends? Dell has been private for three years, how the company is doing is not and has not been public since the deal closed. I see how they're connected and I understand your point in aggregate, but it's 1) not relevant in the first place and 2) even if it were, the positive economic picture you're painting isn't even apparent - Dell could be a disaster right now and nobody would know (and the judge still would have ruled similarly.)
  - dpark 10y ago
    >how the company is doing is not and has not been public since the deal closed This is untrue. Dell has released financials at least once since they went private, when they were bidding for EMC.

dharmon 10y ago

> I don't know why you are trying to make this point about adjusting for risk when the entire question revolves around what the stock was worth at a stationary point in time three years ago. That you don't see how these two are connected is my point. Let me take a step back. The value of a company is the sum of the cash that can be taken out of the business in perpetuity discounted back to present value. A common mistake is thinking that you can nail this down to a precise figure. In fact, it is a range of potential values. Why? Because the future is uncertain, and those future cash flows are uncertain. In other words, there is risk involved. So in the optimistic scenario where everything in the business goes right, you get a high valuation. In a pessimistic scenario the valuation is lower. Which is correct? Nobody can tell from the outset. Now imagine you are doing a valuation for a business, but for the value of that business 3 years ago. You have had the advantage of seeing the trend those cash flows have taken the past 3 years, and whether you admit it to yourself or not, it will influence your valuation. That is all I am saying.

joshdickson 10y ago
> You have had the advantage of seeing the trend those cash flows have taken the past 3 years... And what exactly are those trends? Dell has been private for three years, how the company is doing is not and has not been public since the deal closed. I see how they're connected and I understand your point in aggregate, but it's 1) not relevant in the first place and 2) even if it were, the positive economic picture you're painting isn't even apparent - Dell could be a disaster right now and nobody would know (and the judge still would have ruled similarly.)
- dpark 10y ago
  >how the company is doing is not and has not been public since the deal closed This is untrue. Dell has released financials at least once since they went private, when they were bidding for EMC.