Private Dell: PC Giant To Flee Wall St?
Dell share surges on privatisation chatter. Shares of Dell soared 13 percent to a near eight-month high this week after reports the world’s No. 3 PC maker is in talks with at least two private equity firms about going private.
Shares hovered around the $12.75 mark in after hours trading in the US yesterday.
Silver Lake Partners and TPG Capital were in discussions Tuesday with Dell for a leveraged buyout at around $13 to $14 a share, reports suggest.
The discussions between the PC maker, and private equity are said to be preliminary and financing has not been secured, however a” deal could be announced as soon as this week,” one source told Bloomberg.
In 2000, Dell was the top PC maker, globally, built on its make to order PC business model that cutting out the retailer and costs, but has since steadily ceded market share to Hewlett-Packard and Lenovo.
Now the No. 3 PC maker, Dell has suffered another slump of late, with latest PC shipment figures from Gartner and IDC) showing 10% global market share – a whopping 21% decline compared to same time 2011.
But going private has several advantages and may be the fix-it cure for Dell’s current woes CEO Michael Dell, who returned to the top job in 2007 to save the company he founded in his Uni dorm, so desperately craves.
Mr Dell currently owns 15% of the company.
“They could generate a tremendous amount of cash for many years to come, or they could be more dramatic and invest heavily in a mobile strategy — and not be scrutinized by public investors every quarter while they did it,” said Rich Kugele, US analyst at Needham & Co.
|If Dell can gets is shop in order, it can concentrate on doing what it does best – making damn good PC’s, something which it is renowned for, cloud, enterprise and go hard on mobile.
Dell’s ‘Project Ophelia’ basically a PC in a thumb sized box, showcased at CES last week got rave reviews, and may give Dell the reputation boost as a innovator, it needs as it battles Apple, Samsung and other players.
Tipped to cost under the US$100 mark, it converts any TV or monitor into a fully operation PC device, and is run from the cloud.
“The PC isn’t going away,” said Kugele.
“Companies that rely on Dell for PCs wouldn’t be happy with that. But they do need a better mobile strategy.”