Best of the Week
Most Popular
1. Investing in a Bubble Mania Stock Market Trending Towards Financial Crisis 2.0 CRASH! - 9th Sep 21
2.Tech Stocks Bubble Valuations 2000 vs 2021 - 25th Sep 21
3.Stock Market FOMO Going into Crash Season - 8th Oct 21
4.Stock Market FOMO Hits September Brick Wall - Evergrande China's Lehman's Moment - 22nd Sep 21
5.Crypto Bubble BURSTS! BTC, ETH, XRP CRASH! NiceHash Seizes Funds on Account Halting ALL Withdrawals! - 19th May 21
6.How to Protect Your Self From a Stock Market CRASH / Bear Market? - 14th Oct 21
7.AI Stocks Portfolio Buying and Selling Levels Going Into Market Correction - 11th Oct 21
8.Why Silver Price Could Crash by 20%! - 5th Oct 21
9.Powell: Inflation Might Not Be Transitory, After All - 3rd Oct 21
10.Global Stock Markets Topped 60 Days Before the US Stocks Peaked - 23rd Sep 21
Last 7 days
CATHY WOOD ARK GARBAGE ARK Funds Heading for 90% STOCK CRASH! - 22nd Jan 22
Gold Is the Belle of the Ball. Will Its Dance Turn Bearish? - 22nd Jan 22
Best Neighborhoods to Buy Real Estate in San Diego - 22nd Jan 22
Stock Market January PANIC AI Tech Stocks Buying Opp - Trend Forecast 2022 - 21st Jan 21
How to Get Rich in the MetaVerse - 20th Jan 21
Should you Buy Payment Disruptor Stocks in 2022? - 20th Jan 21
2022 the Year of Smart devices, Electric Vehicles, and AI Startups - 20th Jan 21
Oil Markets More Animated by Geopolitics, Supply, and Demand - 20th Jan 21
WARNING - AI STOCK MARKET CRASH / BEAR SWITCH TRIGGERED! - 19th Jan 22
Fake It Till You Make It: Will Silver’s Motto Work on Gold? - 19th Jan 22
Crude Oil Smashing Stocks - 19th Jan 22
US Stagflation: The Global Risk of 2022 - 19th Jan 22
Stock Market Trend Forecast Early 2022 - Tech Growth Value Stocks Rotation - 18th Jan 22
Stock Market Sentiment Speaks: Are We Setting Up For A 'Mini-Crash'? - 18th Jan 22
Mobile Sports Betting is on a rise: Here’s why - 18th Jan 22
Exponential AI Stocks Mega-trend - 17th Jan 22
THE NEXT BITCOIN - 17th Jan 22
Gold Price Predictions for 2022 - 17th Jan 22
How Do Debt Relief Services Work To Reduce The Amount You Owe? - 17th Jan 22
RIVIAN IPO Illustrates We are in the Mother of all Stock Market Bubbles - 16th Jan 22
All Market Eyes on Copper - 16th Jan 22
The US Dollar Had a Slip-Up, but Gold Turned a Blind Eye to It - 16th Jan 22
A Stock Market Top for the Ages - 16th Jan 22
FREETRADE - Stock Investing Platform, the Good, Bad and Ugly Review, Free Shares, Cancelled Orders - 15th Jan 22
WD 14tb My Book External Drive Unboxing, Testing and Benchmark Performance Amazon Buy Review - 15th Jan 22
Toyland Ferris Wheel Birthday Fun at Gulliver's Rother Valley UK Theme Park 2022 - 15th Jan 22
What You Should Know About a TailoredPay High Risk Merchant Account - 15th Jan 22
Best Metaverse Tech Stocks Investing for 2022 and Beyond - 14th Jan 22
Gold Price Lagging Inflation - 14th Jan 22
Get Your Startup Idea Up And Running With These 7 Tips - 14th Jan 22
What Happens When Your Flight Gets Cancelled in the UK? - 14th Jan 22
How to Profit from 2022’s Biggest Trend Reversal - 11th Jan 22
Stock Market Sentiment Speaks: Are We Ready To Drop To 4400SPX? - 11th Jan 22
What's the Role of an Affiliate Marketer? - 11th Jan 22
Essential Things To Know Before You Set Up A Limited Liability Company - 11th Jan 22
NVIDIA THE KING OF THE METAVERSE! - 10th Jan 22
Fiscal and Monetary Cliffs Have Arrived - 10th Jan 22
The Meteoric Rise of Investing in Trading Cards - 10th Jan 22
IBM The REAL Quantum Metaverse STOCK! - 9th Jan 22
WARNING Failing NVME2 M2 SSD Drives Can Prevent Systems From Booting - Corsair MP600 - 9th Jan 22
The Fed’s inflated cake and a ‘quant’ of history - 9th Jan 22
NVME M2 SSD FAILURE WARNING Signs - Corsair MP600 1tb Drive - 9th Jan 22
Meadowhall Sheffield Christmas Lights 2021 Shopping - Before the Switch on - 9th Jan 22
How Does Insurance Work In Europe? Find Out Here - 9th Jan 22
MATTERPORT (MTTR) - DIGITIZING THE REAL WORLD - METAVERSE INVESTING 2022 - 7th Jan 22
Effect of Deflation On The Gold Price - 7th Jan 22
Stock Market 2022 Requires Different Strategies For Traders/Investors - 7th Jan 22
Old Man Winter Will Stimulate Natural Gas and Heating Oil Demand - 7th Jan 22
Is The Lazy Stock Market Bull Strategy Worth Considering? - 7th Jan 22
METAVERSE - NEW LIFE FOR SONY AGEING GAMING GIANT? - 6th Jan 2022
What Elliott Waves Show for Asia Pacific Stock and Financial Markets 2022 - 6th Jan 2022
Why You Should Register Your Company - 6th Jan 2022
4 Ways to Invest in Silver for 2022 - 6th Jan 2022
UNITY (U) - Metaverse Stock Analysis Investing for 2022 and Beyond - 5th Jan 2022
Stock Market Staving Off Risk-Off - 5th Jan 2022
Gold and Silver Still Hungover After New Year’s Eve - 5th Jan 2022
S&P 500 In an Uncharted Territory, But Is Sky the Limit? - 5th Jan 2022

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Tablet PC's Forced Dell to Go Private

Companies / Tech Stocks Feb 06, 2013 - 02:56 PM GMT

By: Money_Morning

Companies

David Zeiler writes: A proposed deal taking Dell private shows just how hard it has become for the old guard of PC-based companies to survive in a world dominated by mobile computing.

Today (Tuesday) Dell Inc. (Nasdaq: DELL) announced that it had agreed to be acquired for $24.4 billion, or $13.65 per share, by a group that includes private equity firm Silver Lake Partners. Other investors are company founder and CEO Michael Dell, who is contributing about $3.7 billion, and investment firm MSD Capital.


The deal would be the largest leveraged buyout since the 2008 financial crisis, and one of the ten largest ever.

The news has boosted DELL stock about 24%; it was trading at about $11 a few weeks ago.

In an added twist, Microsoft Corp. (Nasdaq; MSFT) is providing a $2 billion loan to the group that is taking Dell private. As one of the top vendors of Windows-based PCs, Dell is one of Microsoft's biggest customers.

But then, that's exactly why Dell has found itself in such desperate straits.

As the computing world has transitioned away from traditional desktops and laptops toward smartphones and tablets, companies like Dell and Hewlett-Packard (NYSE: HPQ) -- which thrived on the sales of those PCs - have fallen on tough times.

At its height in late 1999, Dell was the world's largest PC maker. The Round Rock, TX-based company had a market cap of $122 billion and the stock traded at $50 a share.

But as PC sales have fallen in the wake of Apple Inc.'s (Nasdaq: AAPL) iPhone in 2007 and iPad in 2010, Dell has suffered. By last November, DELL was trading in the $9 range and its market cap was about $17 billion.

Michael Dell Surprised By Tablets
Perhaps the biggest blow to the traditional PC makers like Dell was the dramatic rise of the tablet.

In the fourth quarter of 2012, tablets sales reached 52.5 million units, double the number from the same period a year earlier. Meanwhile, PC sales fell 6.4% year over year to 89.8 million units.

According to research form NPD, more than 240 million tablets will be shipped worldwide in 2013, surpassing PC notebook sales, projected at 204 million, for the first time.

Dell wasn't ready for the post-PC era, or the speed at which it arrived.

When The Wall Street Journal asked Michael Dell in 2011 "what surprised him the most" since he resumed his role as CEO in 2007 (he had left the post in 2004), the sudden popularity of tablets immediately came to mind.

"I completely didn't see that coming," Dell said.

Taking Dell Private Will Aid New Strategy
Still, the company tried to become more relevant to consumers with ventures into music players, smartphones, and high-end laptops.

But the efforts failed to impress consumers, who, after years of watching the company lead the PC price wars, had grown accustomed to thinking of Dell as a low-cost brand.

With no fruit from their consumer strategy, Dell decided to angle for business customers by offering complete solutions that included not just computers but security software, networking, and data storage systems.

While the business efforts have fared slightly better, it hasn't been enough to offset Dell's plunging PC sales, which fell almost 21% in the December quarter year over year.

As the trend toward mobile computing has accelerated, Michael Dell realized that only drastic action would save the company.

After the announcement today company officials said that taking Dell private will make it easier for the company to focus on the most successful part of its business, the strategy of becoming a one-stop-shop for enterprise customers.

"Under a new private company structure, we will have time and flexibility to really pursue and realize the end-to-end solutions strategy," Chief Financial Officer Brian Gladden told Reuters, who added that going private will remove "the scrutiny and limitations associated with operating as a public company."

But even taking Dell private can't cure all that ails the company.

"This is an opportunity for Michael Dell to be a little more flexible managing the company," FBN Securities analyst Shebly Seyrafi told Reuters. "That doesn't take away from the fact they will have challenges in the PC market like they did before."

Source :http://moneymorning.com/2013/02/05/why-dell-had-no-choice-but-to-go-private/

Money Morning/The Money Map Report

©2013 Monument Street Publishing. All Rights Reserved. Protected by copyright laws of the United States and international treaties. Any reproduction, copying, or redistribution (electronic or otherwise, including on the world wide web), of content from this website, in whole or in part, is strictly prohibited without the express written permission of Monument Street Publishing. 105 West Monument Street, Baltimore MD 21201, Email: customerservice@moneymorning.com

Disclaimer: Nothing published by Money Morning should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investent advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication, or after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Money Morning should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

Money Morning Archive

© 2005-2019 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in