Dell Goes Private: Now What?

Michael Teague |

Michael Dell, Founder and CEO of Dell Inc.After much speculation about the fate of the company, Dell, Inc. (DELL) has announced that it will be going private as part of a $24.4 billion deal whose players include CEO Michael Dell himself, the global technology investment firm Silver Lake, and a $2 billion cash investment from Microsoft (MSFT).

Michael Dell, who is ranked among the world’s 50 richest billionaires, has been dealing with a variety of obstacles since 2004, when he handed the reins of power over to top lieutenant Kevin Rollins.  He departed when the company was still sitting comfortably atop the PC market, but a subsequent decline in sales and customer service forced him back in January of 2007.



DELL’s biggest obstacle, irrespective of the inner goings-on of the company, has largely been the result of a massive shift in consumer demand from personal computers to mobile devices and tablets. With little success, the company has tried to tap into the latter market, where they have so far stood little chance against giants Apple (AAPL) and Google (GOOG). Furthermore, since 2004, they have been overtaken in the PC arena as well. Competitors Hewlett Packard (HPQ) and Lenovo Group Limited (LNVGY) have for a considerable period of time enjoyed relative dominance in personal computers.

The terms of the deal as it stands will see shareholders receive an underwhelming $13.65 per share.  HP, which also was reported to be considering a breakup of its own company, has since responded to the move by predicting that DELL’s “ability to invest in new products and services will be severely limited”, especially given its debt load,and Lenovo has also been dismissive of “distracting financial maneuvers”.

Meanwhile, Michael Dell himself has explained the logic of the move, saying that going private will free the company from the distractions of the market and shareholder temperaments, providing it with more energy and resources to diversify products and services, and bolster customer service: "Without having really the scrutiny that is associated with a publicly traded stock, we can make the necessary investment and stick to plan, in some cases be more aggressive than we can today”.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Companies

Symbol Name Price Change % Volume
AAPL Apple Inc. 153.34 -0.46 -0.30 19,219,461 Trade
HP Helmerich & Payne Inc. 56.01 -1.48 -2.57 2,125,060 Trade
BDN.P.E Brandywine Realty Tr Pfd Shs Ben Int Ser E n/a n/a n/a 0 Trade
GOOG Alphabet Inc. 954.96 6.14 0.65 1,034,272 Trade
MSFT Microsoft Corporation 68.77 0.09 0.13 14,667,070 Trade

Comments

Emerging Growth

Naked Brand Group Inc

Naked Brand Group Inc through its wholly-owned subsidiary is engaged in manufacturing and selling of direct and wholesale men's undergarments to consumers and retailers.

Private Markets

Almond Smart Home Router by Securifi

Securifi sells user friendly touch screen routers that also have support for IoT/home automation.Securifi’s Almond revolutionized wireless router setup with its easy to use Touchscreen Interface in 2012. Now our…

Knightscope

Autonomous security robots providing advanced detection capabilities at $7 per hour - aiming to define the future of security. Help #StopTheViolence.