- Deadly N.Y. train derailment leads to Senate call for cameras at tracks
- WWII vet, 90, en route to Pearl Harbor event booted from flight
- SWAT team at Phoenix hospital as armed man clears emergency room
- Kim Jong-un’s uncle dragged from political meeting, booted from party
- Big storm dumps snow on East Coast, travel dicey
- Thai prime minister dissolves Parliament, calls elections
- Hagel to meet with Pakistan’s prime minister
- Kiev: Riot police deployed near protest sites
- Elton John blasts Russia’s anti-gay laws during Moscow concert
- U.N.: Afghanistan slow to enforce law protecting women
Dell going private to reinvent itself
Founder aiding a shift to tablets, smartphones
Dell, mired in the sluggish laptop and desktop business, may have gotten the breathing room it needs Tuesday to remake itself away from the glare of Wall Street — thanks to the company’s billionaire founder and namesake.
The Texas-based firm, which went public in 1988, announced Tuesday that CEO and founder Michael Dell and a group of financiers will purchase the company back from investors in a $24.4 billion deal. At $13.65 a share, the package represents a 25 percent premium above the price shares were trading at in early January, before rumors of the deal first came out. The stock ticked up less than 1 percent to close at $13.42.
It’s the largest deal of its kind since the Great Recession dried up financing for buybacks and other creative financial deals.
“Dell feels like they can’t turn into the kind of company they need to be without getting away from the pressure of having to satisfy the shareholders,” said Stephen Baker, vice president of analysis at NPD Group, based in Port Washington, N.Y. “It’s more likely that they’ll be successful in this path than they would have if they kept going down the path that they were on as a public company.”
Wall Street has been skeptical about the company’s attempts to reinvent itself as a software firm and its attempts to move into the more profitable smartphone and tablet markets.
Analysts say going private will give Dell more flexibility to retool its personal computer business and other lines.
“They can’t give the financial community what it wants while growing the company into what they think it needs to be,” Mr. Baker explained.
Despite the decline of PCs, Dell still has a big stake in the industry. So making a switch away from that would likely mean disappointing earnings reports over the next few quarters, something that investors wouldn’t appreciate, analysts say.
Going private will help Dell focus on “the next 18 months, rather than the next 18 days,” he said. “As a private company, they can make decisions that aren’t just based on profits and revenues in the next quarter, but with a longer-term focus.”
Mr. Dell, who currently owns about 14 percent of the company’s stock, is teaming up with global technology investment firm Silver Lake to buy back stock. Microsoft will contribute a $2 billion loan in the deal.
“I believe this transaction will open an exciting new chapter for Dell, our customers and team members,” Mr. Dell said in a statement. “We can deliver immediate value to stockholders, while we continue the execution of our long-term strategy and focus on delivering best-in-class solutions to our customers as a private enterprise.”
Mr. Dell created the company as a 19-year-old college student in 1984. The young firm rode the Internet boom in the 1990s as personal computer sales took off. But, like many other top tech companies from the 1990s, it has been losing ground as the industry shifts toward smartphones and tablet computers.
Most experts applaud the decision to go private as a step in the right direction.
“He’s tried to transform the company, but it’s just impossible to do on the public stage,” said Jeff Kagan, an independent technology analyst.
© Copyright 2013 The Washington Times, LLC. Click here for reprint permission.
About the Author
Tim Devaney is a national reporter who covers business and international trade for The Washington Times. Previously, he worked for the Detroit News, Grand Rapids Press, Portland Press Herald and Bangor Daily News. Tim can be reached at firstname.lastname@example.org.
- U.S. businesses reach out quickly to partners in Iran
- General Motors ending Chevrolet sales in Europe to focus on Opel and Vauxhall
- 'Momentous day' for in-debt Detroit
- Cyber Monday, Gray Thursday reflect sales shift
- Bye, bye American pie? China wants in on the U.S. apple market.
Latest Blog Entries
By Brahma Chellaney
Beijing's creeping aggression signals a challenge to U.S. presence in the Asian Pacific
- CURL: Obama tells a whopper on IRS scandal
- Lawmakers see 'false narrative' of Obama as a terrorist fighter
- EDITORIAL: Health care hardball
- 'Dude, I'm dreading that I will have to go': Czech prime minister on Mandela funeral
- South Carolina sheriff refuses to lower American flag for Nelson Mandela
- Obamas call to close Vatican embassy is 'slap in the face' to Roman Catholics
- FENNO: Mike Shanahan's empty words no salve to free-falling Redskins
- POWELL: The Fed's scandalous monetary policy
- As the unemployed wait, lawmakers debate about extended benefits
- Sen. Rand Paul: Supreme Court needs to re-examine Fourth Amendment
Independent voices from the The Washington Times Communities
Television commentary, reviews, news and nonstop DVR catch-up by Lisa King Dolloff and friends.
Al Maurer provides a common sense, conservatarian, Constitutional conservative perspective from the battleground state of Colorado
Film Reviews and Articles by Kevin Williams
"Critical thinking is thinking about your thinking while you're thinking in order to make your thinking better." - Dr. Richard Paul
Let it snow
White House pets gone wild!