Dell reportedly is closing in on finalizing a
deal to take the company private and all the speculation is shining a
renewed spotlight on the PC maker, say analysts.
"The buyout speculation is helping Dell
in that investors and customers are giving it a second look," said
Patrick Moorhead, an analyst with Moor Insights & Strategy. "To
public investors, it's the classic wanting what they can't have. And to
customers, it's a sign of confidence. It's important to get a deal
wrapped up in the next few weeks, though, because that positive could
turn negative if it drags out too long."
Earlier Monday, the Wall Street Journal reported that Dell, the world's number three PC maker, is close to finalizing a $23 billion buyout of the company.
Another report from the Bloomberg news service
noted that the deal, which would include four banks, would call for
Michael Dell, the company's founder and CEO, to contribute equity
financing of $500 million to $1 billion. The buyout reportedly is being
led by Silver Lake Management LLC, though Microsoft Corp. is rumored to be also be providing some funding.
Dell, based in Round Rock, Texas, declined comment.
Robert Enderle, an analyst with The Enderle Group, said he expects the deal to be announced this week.
"The
goal is to get Dell out from under a massive amount of reporting cost
and tactical financial performance oversight so they can do big deals,
and are free to restructure the company if they need to," Enderle said.
"If Dell pulls this off, expect other firms in this segment to take a
similar course so they can restructure more effectively for the changed
technology market."
For the last few years, Dell, which has been
public for about 25 years, has been dealing with the struggling PC
market, which has been continually hammered by the sluggish economy and
the burgeoning tablet market.
In the fall of 2011, Dell slipped from its number two spot in the PC market, and was surpassed by Lenovo
. Dell still sits in third place, with 10.2% of worldwide market share.
It's barely ahead of number four Acer Group, which has 9.5% of market
share.
Going private would free Dell from Wall Street
expectations and would give its CEO the flexibiity to be more
competitive in pricing, make key mergers and acquisitions and take other
steps that could make shareholders unhappy but could benefit the bottom
line.
"A buyout would help Dell in the long run," said Moorhead.
"Buyouts and privatization enable companies to make radical changes
more quickly to better position themselves in the future. Instead of
making decisions to better the quarter, they make decisions to improve
the next three to five years.
