Dell Seals Deal To Go Private - InformationWeek
Infrastructure // PC & Servers
02:26 PM
Connect Directly

Dell Seals Deal To Go Private

Michael Dell's bid to take his company private is finally complete. But now that the deal's done, what will Dell do to compete?

Windows 8.1: A Visual Tour
Windows 8.1: Visual Tour
(click image for larger view)
Dell on Tuesday announced that founder and CEO Michael Dell and investment firm Silver Lake Partners have completed their acquisition of the company.

The leveraged buyout has finally been consummated after months of squabbling between Dell and a group of high-profile investors led by Carl Icahn, who maintained shareholders were offered an unfair deal. Approved by shareholders on Sept. 12, the $24.9 billion deal will pay out $13.75 per share plus a special dividend of 13 cents per share.

With the deal done, Michael Dell can now reshape the company without being subjected to quarterly scrutiny from Wall Street, and without the cash flow complexities raised by stock buybacks and dividend payments. Dell is trying to transform the company, which made its name with built-to-order PCs, into a software and services player that can compete with the likes of IBM and HP.

The CEO said last December that the company had successfully reinvented itself as an end-to-end enterprise services company. The PC market continued to unravel faster than anyone anticipated, however, and Windows 8 did little to help. With its primary revenue stream shrinking, Dell's ability to invest in competitive new products appeared in jeopardy, and by February, Dell and Silver Lake had stated their intention to take the company private.

[ Will Windows 8.1 help lift Dell's ship? See Windows 8.1: 10 Essential Upgrade Facts . ]

The initial offer of $24.4 billion, or $13.65 per share, raised the ire of investors such as Icahn, who contended that CEO Dell was attempting to cheat investors out of future profit by snatching up the company at a low point. The pressure forced Dell and Silver Lake to up the ante, including negotiating a change in investor voting procedures, before winning shareholder approval.

Icahn's theatrics played out publicly, with the activist investor using Twitter and other outlets to throw barbs at Dell. For his part, the CEO remained mostly quiet as the buyout proceedings dragged on. Tightlipped Dell executives projected a "business as usual" attitude as they introduced new enterprise products throughout the spring.

Once the world's largest PC maker, Dell debuted new business-oriented laptops and Ultrabooks in August and has indicated it will continue to produce PCs. The company's PC sales have fared better than those of many competitors in recent quarters -- but the numbers were likely inflated by businesses moving off of Windows XP, and by aggressive pricing that valued market share over profit margin. PC revenue might have once paid the R&D bills necessary for Dell to enter new markets, but that's clearly no longer the case.

Dell took some by surprise this fall when it announced its inexpensive but attractively equipped Venue tablets for Android and Windows 8.1. Like HP and Microsoft, Dell was blindsided by the shift toward mobile devices. A foothold in the tablet market could go a long way to easing the company's PC-related pains.

The company is also making headway with next-gen data center technologies, such as its 64-bit ARM-based hyperscale server, a version of which is being demonstrated at this week's TechCon conference in Silicon Valley.

Even in areas of growth, though, Dell faces tough competition; its ARM servers face HP's similar Project Moonshot, for example. Dell's customers and observers should expect to learn more about the company's strategy in December at Dell World, where Michael Dell will address attendees as head of the newly private company.

Comment  | 
Print  | 
More Insights
Newest First  |  Oldest First  |  Threaded View
How Enterprises Are Attacking the IT Security Enterprise
How Enterprises Are Attacking the IT Security Enterprise
To learn more about what organizations are doing to tackle attacks and threats we surveyed a group of 300 IT and infosec professionals to find out what their biggest IT security challenges are and what they're doing to defend against today's threats. Download the report to see what they're saying.
Register for InformationWeek Newsletters
White Papers
Current Issue
2017 State of IT Report
In today's technology-driven world, "innovation" has become a basic expectation. IT leaders are tasked with making technical magic, improving customer experience, and boosting the bottom line -- yet often without any increase to the IT budget. How are organizations striking the balance between new initiatives and cost control? Download our report to learn about the biggest challenges and how savvy IT executives are overcoming them.
Twitter Feed
Sponsored Live Streaming Video
Everything You've Been Told About Mobility Is Wrong
Attend this video symposium with Sean Wisdom, Global Director of Mobility Solutions, and learn about how you can harness powerful new products to mobilize your business potential.
Flash Poll