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Is Dell on the Market?

While Dell hasn't publicly confirmed that it's considering leveraged buyout proposals from private equity firms, Wall Street continues to buzz at the prospect that indeed the computer giant is on the market and a deal could surface in the not-to-distant future.

Two bidders apparently in the mix include TPG Capital and Silver Lake, with Bank of America Merrill Lynch, Barclays, Credit Suisse and the Royal Bank of Canada in the pipeline to provide financing. First reported by Bloomberg on Monday, CEO Michael Dell is not surprisingly a key player in any such deal -- he holds an estimated 16 percent stake valued at about $3.6 billion in the company he founded in his dorm room back in 1984.

The company's stock rose 21 percent as of the close of business yesterday before tapering off more than 4 percent this afternoon. Once valued at more than $100 billion during the dotcom boom, a deal today would be valued at approximately $20 billion, ironically in the ballpark of the amount Hewlett Packard paid for Compaq a decade ago.

Both Dell and HP continue to struggle in the PC market as Asian rivals gain momentum -- most notably Lenovo, which gained prominence after acquiring IBM's PC business in 2004, but also by Acer and Asus.

Like HP, Dell is looking to further extend its footprint into the enterprise, as evidenced by numerous acquisitions in recent years such as SonicWall, EqualLogic, Compellent, Perot Systems, KACE Networks, Ocarina Networks, Force 10, Boomi, Wyse, AppAssure and most recently its push into enterprise software capped by the recent $2.4 billion acquisition of Quest Software.

The question is, would a privately held Dell have the resources to make the acquisitions the company needs in order to continue its push to build upon its enterprise hardware, software and services portfolio? Is a spinoff or outright sale of its PC business in the cards?

What's your view on the potential impact of Dell going private? Drop me a line at jschwartz@1105media.com.

Posted by Jeffrey Schwartz on 01/16/2013 at 1:14 PM


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Reader Comments:

Tue, Jan 29, 2013 Terry Calgary

Dell is a great company and I will continue to use their server/storage products until their quality suffers in favor of profit after being sold to financial institutions. The decline of Dell is not due to their lack of quality, but the lack of high quality in the notebook market specifically. Most organizations were already starting to move to Thinkpad before IBM sold them to Lenovo. The Thinkpad lineup is suited for the business world and I wouldn't use anything else. What we are seeing is just the result of a high quality notebook maker being sold to a Chinese company. The latter of lacking desktop sales is simply that no one needs a desktop to use the internet anymore. Notebooks are cheaper now and tablets are the norm, Dell simply did not follow the market soon enough to compete. I think their biggest fault is being tied to Microsoft for 99% of their sales. Not sure if Windows 8 will do much for anyone.

Thu, Jan 17, 2013 Dan Canada

Oh, and we had both Dell and IBM servers and they both served us (no pun intended) well.

Thu, Jan 17, 2013 Dan Canada

Although the best PC's I've owned are those I put together myself I have both a Dell desktop and a laptop. They are both great. Both 6 years old. When I was working we supported a couple of Dell desktop models through the 00's. Both models had memory management issues that drove us crazy.

Thu, Jan 17, 2013 rglozano Brownsville, Texas

I personally have not run into too many problems with dell, but then again I'm not an IT guy with a big It budget. I totally agree with ibsteve2u perception of American industry. Michael Douglas might have got an award for his rendition of what a good (actually bad CEO) should be, but, the producers didn't do America any favors. I believe the decay of America due to greed is a revelation to everyone except the main stream media.

Thu, Jan 17, 2013 ibsteve2u Commonwealth of Pennsylvania

Hope it does go private...once upon a time, I bought Dells for my area of responsibility when the rather large corporation I was employed by had been successfully wined and dined by Compaq. Politically, that decision was most definitely yet another blunder on my part - hindsight being so clear- but I cared about uptime as my AOR was the plant's moneymaker. And I got that uptime...as in, no downtime whatsoever due to hardware failure. (A good thing; had my "unapproved" servers been less than stellar, I wouldn't have lasted as long as I did.) So for "technical reasons" I liked Dell...but they became...generic. On the "long term" side unless you have just gone public, are doing something the shareholders/analysts have no choice but to admit/accept they don't understand, or are able to convince the shareholders that you are a wizard best left alone a la Steve Jobs, I don't think that you can have a "vision" other than self-enrichment and run a public corporation in America anymore....sooner or later, the financial "journalists", Wall Street analysts and the "large-shareholders-cum-bean counters" will destroy you and your corporation with their myopic concept of a "good leader", to whit "anybody who generates a fast buck today - even if that fast buck results from actions that will most certainly eventually destroy the corporation/nation/world". (Although they phrase it less clearly; it's usually more along the lines of "He/She makes shareholder value their priority.". With recognition where due of Jack Welch's role in creating that concept - and so his role in the consequential decay of America. But how asinine;telling certain kinds of people that "greed is good" is like telling pyromaniacs that "arson is acceptable": Don't act all surprised when you wake up and nothing is left but smoldering ruins.)

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