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Dell Going Private In $24.4 Billion Agreement 217

Posted by timothy
from the next-month-back-in-the-old-dorm-room dept.
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.
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Dell Going Private In $24.4 Billion Agreement

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  • near future (Score:3, Insightful)

    by Anonymous Coward on Tuesday February 05, 2013 @12:45PM (#42797925)

    No Linux support at all...

    Time to support system 76 with my dollars.

  • Good maybe (Score:5, Insightful)

    by Dyinobal (1427207) on Tuesday February 05, 2013 @12:52PM (#42798011)
    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.
  • by yeshuawatso (1774190) on Tuesday February 05, 2013 @12:54PM (#42798041) Journal

    Any deal with Microsoft in the title is destined for failure. Just ask Nokia [bgr.com] how that's worked out for them so far.

  • by DigitalSorceress (156609) on Tuesday February 05, 2013 @12:55PM (#42798065)

    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

  • by Dystopian Rebel (714995) * on Tuesday February 05, 2013 @01:12PM (#42798293) Journal

    > I'm no economist, but

    That's ok, they don't know what they're talking about either.

  • by NatasRevol (731260) on Tuesday February 05, 2013 @01:22PM (#42798515) Journal

    And the CEO that led them to this place.

  • Re:near future (Score:5, Insightful)

    by Grishnakh (216268) on Tuesday February 05, 2013 @01:43PM (#42798853)

    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.

  • Big gamble... (Score:4, Insightful)

    by erp_consultant (2614861) on Tuesday February 05, 2013 @01:45PM (#42798871)

    Dell - the company and the person - are taking a very big gamble here. The company has been trying, mostly unsuccessfully, for the past several years to get a foothold in the service business. By most measures they have not done very well. Part of that probably stems from their terrible reputation in PC support in the consumer market. Perhaps they feel shackled by the PC business and quarterly reports and Sarbanes-Oxley, etc. And those are valid concerns.

    But...Michael Dell is still going to be in charge. And they are going to have a lot of debt. And PC sales still make up a majority of their profits. In the short term it will probably mean lots of layoffs...particularly for people in the non-service sector of the company.

  • by Alomex (148003) on Tuesday February 05, 2013 @01:49PM (#42798929) Homepage

    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.

  • by dunkelfalke (91624) on Tuesday February 05, 2013 @02:06PM (#42799217)

    So was Nokia, not so long ago.

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