Jumping the Shark With DELL, ES and the Fonz

NEW YORK ( TheStreet) -- Last night as we were flipping through the channels, I found an episode of "Happy Days" I had not seen since it originally aired in 1977. This was not any ordinary episode, but the dreadful one that inspired the term "jumping the shark"; used to describe a decline in show quality that leads to desperation in order to draw viewers. It's what once-successful shows do when they run out of material.

In the conclusion of what was unbelievably a three-part episode, main character Fonzie literally attempts to jump over a shark on water skis. My son was excited at first to view this, he'd heard the term many times, but was unaware of where it had originated from. Suffice it to say that it was an awful episode of a once great show, and I could not even watch the whole thing.

Unfortunately, there have been a couple recent examples of companies "jumping the shark," in terms of exiting the publicly traded arena in disappointing deals.

It's still hard to believe that Dell ( DELL) is being taken out at $13.65/share. While not the company it once was, if the deal is accepted by shareholders, it will be a very disappointing end. I thought it would fetch a higher price, especially given the bounty of cash and securities on the balance sheet.

Dell ended last quarter with $11.3 billion in cash and short-term investments, and $2.9 billion in long-term investments, for a total of $14.2 billion in cash and securities, or more than $8 per share. Even netting out the company's considerable debt load of $9 billion, leaves $5.2 billion, or $3 per share. Yet the deal is being done at $13.65; disappointing to say the least.

While the Dell saga has been the headline grabber, it appears as though small nuclear play Energy Solutions ( ES) will also end its run in the public markets in desperate fashion. The company recently agreed to be taken private at $3.75/share by Energy Capital Partners.

That may be a great price to those who took a stake last summer, when shares traded in the $1.50-$1.75 range, but this was once a $25-plus stock. It is a complicated one and has substantial debt ($811 million) and other liabilities, but $3.75 seems to be on the bargain-basement side. This company provides service essential in the nuclear space including decommissioning, decontamination, site clean-up, and should have a great deal of demand ahead of it.

The problem is, there's been little other serious interest since the deal was announced. Part of the deal with Energy Capital included a 30-day period in which Energy Solutions could entertain other bids. That period expired Thursday. According to an Energy Solutions press release, there were 24 other potential suitors contacted, and just one entered into a non-disclosure agreement to evaluate the company.

The end result was no takers. It's hard to believe that ES will be taken out at just over book value. I'm not sure what the rush is.

In case you are wondering, Fonzie was indeed successful in his attempt to water ski jump over the shark; a bit more successful than Dell and Energy Solutions have been in "efforts" to extract value for their shareholders.

At the time of publication, the author was long ES

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.
Jonathan Heller, CFA, is president of KEJ Financial Advisors, his fee-only financial planning company. Jon spent 17 years at Bloomberg Financial Markets in various roles, from 1989 until 2005. He ran Bloomberg's Equity Fundamental Research Department from 1994 until 1998, when he assumed responsibility for Bloomberg's Equity Data Research Department. In 2001, he joined Bloomberg's Publishing group as senior markets editor and writer for Bloomberg Personal Finance Magazine, and an associate editor and contributor for Bloomberg Markets Magazine. In 2005, he joined SEI Investments as director of investment communications within SEI's Investment Management Unit.

Jon is also the founder of the Cheap Stocks Web site, a site dedicated to deep-value investing. He has an undergraduate degree from Grove City College and an MBA from Rider University, where he has also served on the adjunct faculty; he is also a CFA charter holder.