Dell to Go Private in $24.4 Billion Deal That Includes Microsoft

By Jeffrey Burt  |  Posted 2013-02-05 Print this article Print

For bidders who did not qualify during the initial go-shop period, the termination fee would be $450 million.

Like other companies with tight ties to the PC space, Dell has been significantly impacted by the weakening global PC market. In addition, like those other companies—including Hewlett-Packard, the world's number-one PC vendor, and chip makers Intel and Advanced Micro Devices—Dell over the past few years has been working to transform itself from primarily a PC and server maker to an enterprise IT solutions provider.

Through in-house development and acquisitions—of companies such as Perot Systems (services), Compellent and EqualLogic (storage), Force10 Networks (data center networking) and SonicWall (security)—Dell has been working to build up its data center capabilities. Dell has sought to integrate these dozen-plus acquisitions into the company, but the company is still being dragged down by its legacy PC business.

Analysts with Gartner said that worldwide PC shipments in the fourth quarter of 2012 fell 4.9 percent from the same period in 2011, and that during the same period, Dell PC shipments dropped 20.9 percent.

Analysts generally have given Dell credit for the efforts that its executives have made to transform the company, but have added that it will continue to be an arduous journey. A key idea behind taking Dell private is that executives will be able to accelerate their transformation efforts outside of the glare of Wall Street and financial analysts and the pressure of quarterly financial reports.

"You don't have to worry about the market scaring away investors," Charles King, principle analyst at Pund-IT Research, told eWEEK in January after reports about the effort to take Dell private began to circulate. "That's been a killer to a number of technology companies for quite a while. ... By taking yourself off the tablet of financial industry analysts and headlines, you get out of the hype cycle and just continue doing what you're doing and making money for shareholders."

What Dell is trying to do right now—from reducing complexity within the organization, to merging the various companies they've acquired, to developing a strong, coherent strategy moving forward—is difficult for any company, and even more so as a public company, according to Forrester Research analyst David Johnson. Trying to transform like Dell is doing is difficult when executives also have to worry about growing the various lines of business inside the company, particularly given the large number of acquisitions, Johnson said in a Feb. 5 blog post.


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