Dell Going Private In $24.4 Billion Agreement

Nerval's Lobster writes "Dell is going private again, as the result of a $24.4 billion deal involving private-equity investors and Microsoft. The deal will close before the end of the second quarter of Dell's fiscal 2014, according to Reuters. Dell founder and namesake Michael Dell, who owns roughly 14 percent of the company's common shares, will continue to lead the newly privatized venture as Chairman and Chief Executive Officer. He will contribute his existing shares to the new company, on top of a 'substantial' additional cash investment. As with other hardware manufacturers in the space, Dell faces the specter of a softening PC market. And while Dell has made significant efforts to penetrate other markets—including the launch of a private cloud architecture based on the open-source OpenStack—that weakness has affected its bottom line: for its fiscal 2013 third quarter, the company reported an 11 percent decrease in revenue from the previous year; while it enjoyed an increase in revenue from its servers and services businesses, revenue from its Consumer division dipped 23 percent. Its Large Enterprise, Small and Medium Business, and Public revenue also declined." Another take at the New York Times.

Comments

Good maybe

[Dyinobal]

Good maybe, they can get back to providing a good service/product for reasonable prices and a modest profit rather than the 100% as much money as possible even at the expense of future profits model that the current corporate culture in the world seems to mandate as the norm.

Could be the best thing...

[DigitalSorceress]

This could be the best thing for Dell.

I'm no economist, but the limited exposure I've had to public companies is that nowadays, it's all about ONLY the next quarterly report.

The way the stock market is pushing things, you can't actually make good long term decisions for your company because the only thing that matters is short term stuff.

By buying back the stock, they're possibly giving themselves the opportunity to take control back and run the company in the best interests of long-term strategy/goals.

Good Luck Dell

Re:Could be the best thing...

[Alomex]

This is true, BUT, in this case Dell will be heavily in debt which negates any benefits of going private.

Not really. Most people who finance private takeovers have a much larger time span in mind. While the stock market cares about the next quarter, a typical private investment fund like Onex, Cerberus or even Berkshire-Hathaway (when acting as a lender) has a time span of 5-10 years in mind. As well they usually the have skin in the game, i.e. they just don't issue debt. They actually own part of the company or have warrants for shares.

Re:near future

[Grishnakh]

I thought the "Windows Tax" wasn't really an issue though: people have complained many times before how Dell would offer a PC with Windows and Linux, and the Linux version would cost more, and it turned out the reason was that, even though the Windows license added to the cost, it was more than made up for by the kickbacks they got from all the crapware pre-loaded. Effectively, the crapware helped subsidized the computer. So if you're just going to wipe the HD and install Linux, a computer subsidized by crapware can be a pretty good deal.

Re:Give the money back to the shareholders!

[dunkelfalke]

So was Nokia, not so long ago.