DealBook: Dell Adjourns Vote on Deal as Some Big Investors Start to Shift

Kimihiro Hoshino/Agence France-Presse — Getty ImagesMichael S. Dell, founder of the computer company that bears his name.

9:21 p.m. | Updated

Dell bought itself six more days to win backing for its proposed $24.4 billion sale to its founder, but the fight for additional support remained tough.

On Thursday, Dell, the computer maker, adjourned a meeting for shareholders to vote on the deal only minutes after opening the gathering. The vote is now scheduled for July 24 at 6 p.m.

Thursday’s decision, which many had expected, prolongs the drama surrounding the former giant of the personal computer industry. Dell has been shrouded in uncertainty for several months, as investors have questioned whether the $13.65-a-share bid by Michael S. Dell and the investment firm Silver Lake would succeed.

The meeting was adjourned after preliminary tallies showed that the deal would almost certainly have been defeated. With more time, a committee of Dell’s board and the company’s proposed buyers will try to twist more arms.

The two groups have already made headway. On Wednesday night, a number of big institutional investors switched their votes to “yes,” people who had been briefed on the matter said. Those investors included big asset managers like the Vanguard Group, BlackRock, the State Street Corporation, the Bank of New York Mellon and Invesco.

For the votes already cast, the race looks like a dead heat, one of these people said. But an estimated 23 percent of Dell votes have not been cast, effectively counting as no votes. And any votes can be changed before the new shareholder meeting, meaning that the landscape may change yet again.

The bar for approving the deal is high. More than 42 percent of Dell’s shares would have to be cast in favor of the deal. The billionaire Carl C. Icahn and Southeastern Asset Management, who have proposed an alternative to the leveraged buyout, together own almost 12.7 percent.

“It is unfortunate, although not surprising, that Dell’s board and special committee have delayed the date of the special meeting at which stockholders can vote on the Michael Dell/Silver Lake freeze out transaction,” Mr. Icahn and Southeastern said in a statement. “We believe that this delay reflects the unhappiness of Dell stockholders with the Michael Dell/Silver Lake offer, which we believe substantially undervalues the company.”

Instead, Mr. Icahn and Southeastern have proposed that the company buy back 1.1 billion shares for $14 each, and offer warrants to buy additional shares for $20 each. The two investors valued their plan at $15.50 to $18. But the committee of Dell’s board rejected the idea as too risky and not in the best interests of other shareholders.

Both sides have argued that Dell must continue to move away from personal computer manufacturing, which once propelled its profits but now weighs down its prospects. The embattled business is trying to build a more profitable corporate software and services operation.

But Mr. Dell and Silver Lake argue that such a transformation can only succeed if carried out in private, away from analysts and public investors. Mr. Icahn and Southeastern dismiss that contention, while arguing that the current offer is too low.

Many investors appear to hope that the prospect of defeat will force Mr. Dell into raising the bid. He acquiesced before, increasing the purchase price to its current level from $13.60.

The committee will try to persuade the bidders in raise their price again, the people briefed on the matter said. But people close to Mr. Dell and Silver Lake insist that no such increase is coming, given the declining financial health of the company and the overall weakness of the personal computer industry.

If that is the case, the Dell committee will likely seek a letter from Mr. Dell and Silver Lake confirming that $13.65 a share is their best-and-final offer, erasing any illusions about an increase. Shares in Dell rose 1.9 percent on Thursday, to $13.12, suggesting that investors feel somewhat more optimistic that the buyout will succeed.

Hulu, Seeking a Buyer, May Shift Course

But the valedictory lap did not last long. Even as the number of views were adding up, so were concerns within the company about the site’s future.

That’s because Hulu, the Web streaming service that is jointly owned by the Walt Disney Company, NBCUniversal, and News Corporation, is up for sale. And each of the potential buyers brings with it a different vision for what Hulu should become.

The interested parties include Time Warner Cable, DirecTV, the Chernin Group — an investment firm owned by the former News Corporation president Peter Chernin — and two private equity firms, Guggenheim Digital Media and Kohlberg Kravis Roberts.

Yahoo, which completed its $1.1 billion acquisition of Tumblr on Thursday, had also expressed interest with an exploratory offer of $600 million to $800 million, according to several people briefed on the sale, who, like several others in this article, spoke on the condition of anonymity because negotiations for the sale were continuing.

The eventual value of Hulu (which would include the brand, its accessible interface and the rights to many of the television shows it offers) is expected to be roughly $1 billion. Binding bids are due by Friday, though one person familiar with the process said the deadline could be delayed until next month.

Web sites change hands all the time, but Hulu’s sale could signal something more fundamental: the end — at least in its current form — of one of the pioneers of online streaming, which in recent years has become an increasingly popular way to view content.

Hulu has a free Web site, with streams of TV episodes supported by ads, and a subscriber-only section, called Hulu Plus,which offers additional episodes at a cost. In 2012, Hulu had $695 million in revenue and the Hulu Plus service had four million paying users, according to the company.

Depending on the buyer, Hulu could be used to foster the further growth of online streaming as an alternative to the cable TV bundle. Or the site could be kept under lock and key, exclusively for the use of cable subscribers.

Time Warner Cable, for instance, would like to use Hulu to create an industrywide “TV Everywhere” hub in which subscribers could have access to network and cable shows on-demand. A distributor like DirecTV could use Hulu — both its brand name and its technology — to sell a new service that streams a bundle of television channels to subscribers over the Internet. Intel is trying to create a similar type of service; if it succeeds, then traditional distributors may feel the need to sell something similar.

For cable or satellite distributors, Hulu is also a prize for an existential reason: as an executive at one distributor put it, “It’ll make us look like we’re ready for the future.”

But that option concerns some Hulu employees who are fond of the company’s quirky Silicon Valley-meets-Hollywood culture. They see the site as an innovative service that untethers shows from the television, not as another piece of a costly cable bill.

“Can Hulu remain Hulu if a cable company buys it?” asked one person close to the company.

Several Hulu executives have already left the company, amid worries about the future, and it is possible there could be an exodus of creative and engineering employees if a cable operator wins the auction and the site loses its start-up identity.

Jason Kilar, the founding chief executive of Hulu, left in March and was temporarily replaced by Andy Forssell, the senior vice president for content and now the acting chief executive. Richard Tom, the former chief technology officer at Hulu, left after Mr. Kilar, as did Johannes Larcher, the former senior vice president for international operations. Later this summer, Pete Distad, Hulu’s senior vice president for marketing and distribution, also plans to depart. A spokeswoman for Hulu declined to comment.

Mr. Chernin has the most personal connection to Hulu, as he championed the start-up from its inception when he was still at News Corporation. This year, Mr. Chernin reportedly bid about $500 million for the company. The Chernin Group receives financial backing from Providence Equity Partners, which until October owned a 10 percent stake in Hulu. (Providence is not directly involved in the bid.)

Now, AT&T is in talks to join the Chernin Group in a bid for Hulu, a pairing that would give Mr. Chernin’s media, technology and entertainment investment group the financial heft to go up against major corporations. (The technology Web site AllThingsD first reported on the partnership. An AT&T spokesman declined to comment.)

For AT&T, Hulu could present the opportunity to expand its “U-verse Screen Pack,” a $5-a-month option that lets U-verse TV subscribers stream videos.

Michael J. de la Merced contributed reporting.

Disruptions: Smartphone Battles Shift to Software

Eric Risberg/Associated Press Timothy D. Cook, Apple’s chief executive, on Monday at the company’s Worldwide Developers Conference in San Francisco.

SAN FRANCISCO — Last week, Timothy D. Cook, Apple’s chief executive, stood on stage at the company’s Worldwide Developers Conference without a new version of the iPhone or the iPad or some new device.

After showing off new laptop computers and a new, cylindrical Mac Pro, Mr. Cook and other Apple executives spent the rest of their two-hour keynote address discussing the features of Apple’s latest mobile operating system, iOS 7. With the image of a flattened smartphone interface with thin typography on a screen in the background, Mr. Cook proudly noted, “This is the biggest change to iOS since the introduction of the iPhone.”

How does he figure that?

Mr. Cook’s bold claim was based on something that is well understood in tech circles but is easily overlooked by consumers. It is the design of the software, far more than the look and feel of the device itself, that allows a company to leap over its competitors.

Hardware features like processing speed or screen resolution or even how well a camera works offer only fleeting advantages in the constant competition among smartphone manufacturers. And with more than a billion smartphones in the world today, much of them with the same rectangular design meant to fit in your hand yet large enough to be used as a phone, it is hard to imagine a breakthrough in their general look.

But changes to the software are limited only by the skill and creativity of a company’s engineers and designers and are not as easily mimicked since they appeal to softer notions like “experience” rather than speed or weight.

Designers at Apple, Microsoft and Google appear to have been keenly aware of that when they worked on the latest versions of their mobile operating systems, experimenting with ways of making software that is unique yet as intuitive as a road sign.

“I have my home, I have my office and I now I have my phone interface,” said Paola Antonelli, senior curator of architecture and design at the Museum of Modern Art in New York. “When you turn a smartphone off it is an enigmatic monolith; it’s the interface that not only animates it but gives it meaning.” Ms. Antonelli said she hoped to one day include iOS 7 in MoMA’s design collection.

Apple is making some stark changes to the appearance of its software with the latest operating system, which will be available to consumers in the fall. Jonathan Ive, senior vice president for industrial design at Apple and the executive responsible for the new look, has done away with design metaphors like a wood grain bookshelf for the phone’s virtual newsstand. The new look also eliminates borders. It doesn’t sound like much, but that allows apps to stretch across the screen, which makes the phone feel larger. By doing away with shadows and dark colors, the design makes the phone’s screen feel brighter, too.

Interestingly, until this update, among the digital technology community, Apple was losing its reputation for cutting-edge design as competitors like Microsoft experimented.

“From a design standpoint, Apple’s interface became pretty cheesy and predictable,” said Yves Béhar, the founder of Fuseproject, a San Francisco design agency that helped create the low-cost One Laptop Per Child PC and the Jawbone Up wristband health-monitoring device. “It lacked strength and vision.”

Microsoft, which was regularly criticized in recent years for the staid look of its software, has been pushing the design boundaries as it tries to play catch-up in smartphones. In a recent blog post on the company’s Web site, Steve Clayton, a design manager at Microsoft, wrote that company executives finally understood about three years ago that the look of the software was just as important as what the device could do.

The new appearance of the company’s operating system for mobile devices, Windows Phone 7, consists of an array of flat, colorful squares that can be easily moved around on the screen. Though when that tiles-based look was also applied to the Windows 8 PC operating system, some longtime customers complained it was too drastic.

But it has been good for the mobile business.

In the first quarter of 2013, Windows Phone nudged Blackberry to become the third most popular phone operating system globally, according to a report by IDC, a market research firm. Microsoft shipped seven million Windows Phone 7 devices in the first quarter, compared with 6.3 million Blackberry devices. Blackberry is trying to rebound with a new version of its phone with software that has also changed considerably from older versions.

Mr. Béhar said a good software design would always help sell more hardware.

“We are in an era where the 30-second TV ad doesn’t count anymore,” he said. “The product — the smartphone — is its own form of advertising today and a good experience, where people want to spend more time with the product, is what people see.”

E-mail: bilton@nytimes.com

Yahoo’s Tumblr Deal Is a Bet on a Shift in Social Media

It also heralds a larger shift in social media. Facebook arguably invented modern social networking, and is still the king. But increasingly its approach is seen as passive and outdated as people flock to sites like Tumblr where they can be more actively engaged in creating personal, expressive content to share — and which could potentially translate to advertising dollars.

“People love a stage or a pulpit from which they can broadcast,” S. Shyam Sundar, a director of the Media Effects Research Laboratory at Pennsylvania State University, explained. “The genie is out of the bottle. Everyone loves it and it’s very seductive for users to get online and be a source of content, rather than just consuming passively.”

This is behind the appeal of sites like Tumblr, where millions have created signature blogs; or Reddit, the news aggregator, which is encouraging users to make and upload video content to share; or video sites like YouTube. Also, Vine, a Twitter app that allows people to easily make and post six-second videos has been wildly popular since its debut in January. One of Vine’s creators, Dom Hofmann, said its initial success was “rooted in the simplicity of the tool.”

Snapchat, the messaging application, which lets people add text or draw cartoons on top of photos and videos, is processing upward of 150 million images each day. And Instagram, which Facebook acquired last year, has attracted more than 100 million users in its short life span — letting people add vintage effects and other filters to their photos.

The more services like Vine and Tumblr can “come up with ways to let people control and generate content and project identity,” Mr. Sundar predicted, the more successful they will be.

Still, these newer sites have not yet proved they are moneymakers, which makes Yahoo’s move a big bet. And as much as Tumblr’s sale can be seen as a success story for the small company, it also hints at the darker struggles of a social media service that is rich in users and nothing else.

Plus, Facebook is still a force to be reckoned with. The company has a billion-plus users and generated $5 billion in revenue last year. But except for the Instagram acquisition, Facebook has been slow to introduce tools to let members make and create interesting content beyond uploading photos and videos.

The result is that it has evolved more into a social directory, a kind of yellow pages of the Internet, where people spend time tending to their public image and endlessly tweaking security settings to keep their party pictures private. And signs have begun to emerge that users are becoming bored and disenchanted with the site.

A recent report by Piper Jaffray that surveyed 5,200 American teenagers on their online use found that while Facebook was still the most important media destination for teenagers, its popularity slipped by 9 percent from spring of 2012.

Gene Munster, one of the lead analysts on the survey, said that if anything, the results showed that the taste and interest of Web users, particularly younger ones, was fickle and fleeting.

“It’s not a question of whether or not Facebook will stay relevant,” Mr. Munster said. “On the margin, they will still be relevant. It’s about the potential for declining engagement and what that impact is over the longer-term for making money.”

People have so many news feeds, sites, apps and in-boxes competing for their time, said Kim Celestre, an analyst with Forrester Research, that the sites and services where they are active participants are more likely to hold their attention for longer, attracting advertising dollars. Tumblr says its members spend 24 billion minutes on the site each month.

“Big marketing campaigns are looking to bring people into their brand and immerse them,” she said.

In a Slight Shift, North Korea Widens Internet Access, but Just for Visitors

Cracking the door open slightly to wider Internet use, the government will allow a company called Koryolink to give foreigners access to 3G mobile Internet service by next Friday, according to The Associated Press, which has a bureau in the North.

The North Korean police state is famously cloistered, a means for the government to keep news of the world from its impoverished people. Only the most elite North Koreans have been allowed access to the Internet, and even they are watched. And although many North Koreans are allowed to have cellphones, sanctioned phones cannot call outside the country.

Foreigners were only recently allowed to use cellphones in the country. Previously, most had to surrender their phones with customs agents.

But it is unlikely that the small opening will compromise the North’s tight control of its people; the relatively few foreigners who travel to North Korea — a group that includes tourists and occasional journalists — are assigned government minders.

The decision, announced Friday, to allow foreigners Internet access comes a month after Google’s chairman, Eric E. Schmidt, visited Pyongyang, the North’s capital. While there he prodded officials on allowing Internet access, noting how easy it would be to set up through the expanding 3G network of Koryolink, a joint venture of North Korean and Egyptian telecommunications corporations. Presumably, Mr. Schmidt’s appeal was directed at giving North Koreans such capability.

“As the world becomes increasingly connected, their decision to be virtually isolated is very much going to affect their physical world, their economic growth and so forth,” Mr. Schmidt told reporters following his visit. “We made that alternative very, very clear.”

North Koreans will get some benefit from the 3G service, as they will be allowed to text and make video calls, The Associated Press said. They can also view newspaper reports — but the news service mentioned only one source: Rodong Sinmun, the North’s main Communist Party newspaper.

Apple Shake-Up Could Lead to Design Shift

There, behind a list of text messages, missed phone calls and other updates, is a gray background with the unmistakable texture of fine linen.

Steven P. Jobs, the Apple chief executive who died a year ago, pushed the company’s software designers to use the linen texture liberally in the software for the company’s mobile devices. He did the same with many other virtual doodads that mimic the appearance and behavior of real-world things, like wooden shelves for organizing newspapers and the page-flipping motion of a book, according to people who worked with him but declined to be named to avoid Apple’s ire.

The management shake-up that Apple announced on Monday is likely to mean that Apple will shift away from such visual tricks, which many people within the company look down upon. As part of the changes, the company fired Scott Forstall, the leader of Apple’s mobile software development and a disciple of Mr. Jobs. While Mr. Forstall’s abrasive style and resistance to collaboration with other parts of the company were the main factors in his undoing, the change also represents the departure of the most vocal and high-ranking proponent of the visual design style favored by Mr. Jobs.

The executive who will now set the direction for the look of Apple’s software is Jonathan Ive, who has long been responsible for Apple’s minimalist hardware designs. Mr. Ive, despite his close relationship with Mr. Jobs, has made his distaste for the visual ornamentation in Apple’s mobile software known within the company, according to current and former Apple employees who asked not to be named discussing internal matters.

This may seem like little more than an internal disagreement over taste. But Apple venerates design like few other companies of its size, and its customers have rewarded it handsomely as a result. Apple’s decisions can influence how millions of people use and think about digital devices — not only its own but those made by other companies that look to Apple as a standard-setter in design.

Axel Roesler, associate professor and chairman of the interaction design program at the University of Washington, says Apple’s software designs had become larded with nostalgia, unnecessary visual references to the past that he compared to Greek columns in modern-day architecture. He said he would like to see Mr. Ive take a fresh approach.

“Apple, as a design leader, is not only capable of doing this, they have a responsibility for doing it,” he said. “People expect great things from them.”

Steve Dowling, an Apple spokesman, declined to comment.

Apple’s customers do not seem to have serious qualms about the design choices the company has made as they continue to buy iPhones and iPads at a healthy clip. But within the circles of designers and technology executives outside Apple who obsess over the details of how products look and work, there has been a growing amount of grumbling in recent years that Apple’s approach is starting to look dated.

The style favored by Mr. Forstall and Mr. Jobs is known in this crowd as skeuomorphism, in which certain images and metaphors, like a spiral-bound notebook or stitched leather, are used in software to give people a reassuring real-world reference.

In contrast, Microsoft, not known as a big risk-taker, has been praised recently for taking greater creative risks in the design of its software than Apple has. It has come up with a visual style that is now used throughout its computer, mobile and game products. It relies heavily on typography and sheets of tiles that provide access to programs and are updated with photos and other online information. It is not yet clear whether this approach will be a hit with people who do not spend time thinking about design.

Bill Flora, a former Microsoft designer who created the earliest prototypes of its new visual style, said Apple had not been innovative enough in the design of its software. “I have found their hardware to be amazing and sophisticated, and I have found their software to be kind of old school,” said Mr. Flora, who now has his own design firm, Tectonic, in Seattle. “Their approach really wasn’t what I was taught as a designer in design school.”