Dell Buyout Draws Analyst Praise, HP Attention, Lawsuit Threats
King said that while the deal allows for counter-proposals from outside parties, the onerous termination fees of $180 million or $450 million make it unlikely that other offerings will pop up. In addition, the 25 percent premium on the shares makes it likely that shareholders will approve the deal, he said. What happens when Dell does go private is up for speculation. Gartner’s O’Connell said that the assumption is that the company’s transformation strategy will go on as expected, but there are no guarantees. The company may decide to shed some businesses—such as PCs—though the presence of Microsoft seems to indicate that there will continue to be some sort of client business, he said.Carter Lusher, chief IT analyst at Ovum, echoed those sentiments. “The implication of going private is that Dell is planning radical changes to its strategy and product roadmap,” Lusher wrote in a research note. “While the company might come out of this transition stronger with a product lineup that better meets the needs of businesses and public sector organizations, there will be uncertainty as to what products and services stay, get strengthen, or get eliminated.” Strong communications with partners and customers will be a key to the success of the transition, he wrote. IDC analyst Matt Eastwood told eWEEK that he expects Dell will shed some low-margin businesses, such as consumer and printing, in favor of the more revenue-rich enterprise IT efforts. “That said, I believe Dell will stay in clients but in a more targeted way, perhaps with a strategy that is increasingly segment-focused (healthcare, education, etc.),” Eastwood wrote in an email. “Otherwise, it’s more of the same, but when Dell comes out of this with a second IPO, they will look quite different than they look today.” Even as it goes private, Dell is faced with some challenges, the analysts said. O’Connell noted that the company will still be dealing with a stalling PC business, still needs to address shortcomings in such areas as smartphones and tablets, and just as significant, a reputation as a PC maker. Officials will have to continue to court customers with the idea that the company can be trusted as the key technology partner, and will have to ensure that they have the right sales and marketing people to sell that enterprise IT portfolio. “It takes time to change customer perceptions like that,” O’Connell said.
“The broad transformation isn’t going to change, but some of the details underneath just might,” he said.