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Dell is in buyout talks with two private-equity firms

In an attempt to one day resurface as a true competitor in the computer technology industry, Dell is looking to go private.

An anonymous source recently told Bloomberg that Dell is in buyout talks with two private-equity firms. The talks are in their earliest stages, so it's unclear if the buyout will go through.

Dell is likely looking to go private because it lost one-third of its value last year alone. PC sales are slow since PC demand can't keep up with that of mobile devices, and Dell has to hear about its financial failures from shareholders each quarter.

Dell's market value was $18.9 billion as of January 11. Its enterprise value is 4.4 times earnings before taxes, depreciation, amortization and interest for the last year, making it a lower valuation than every PC maker bigger than $1 billion with the exception of Hewlett-Packard.

Like some other PC makers, Dell was hoping that Windows 8's release would help boost sales of its hardware. However, Windows 8 device sales haven't been that impressive. While Microsoft happily announced 60 million Windows 8 licenses sold just last week, that doesn't mean Windows 8 devices are flying off the shelves. Dell is still waiting on a sales boost for devices like the Dell XPS 12 convertible tablet.

For the third quarter in 2012, Dell's profit fell 47 percent to 39 cents per share while revenue dropped 11 percent to $13.7 billion from a year previous (Wall Street expected $13.9 billion). Its net income fell from $893 million (49 cents per share) in Q3 2011 to $475 million (27 cents per share) in Q3 2012.

For the same quarter, Dell's PC shipments fell 8.3 percent from a year earlier.

Dell predicts fourth quarter revenue of $14 billion to $14.4 billion, which is a bit less than the $14.5 billion analysts were shooting for. In Q4 2011, revenue was $16 billion.

One good aspect is that Dell's shares increased 13 percent today after news of the possible buyout had spread.

Source: Bloomberg

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RE: Hmm
By StevoLincolnite on 1/15/2013 2:32:33 AM , Rating: 2
Dell has shown it can still be innovative though.

Case in point, the Dell Inspiron Duo. - Even if it's not perfect and is paired up with only an Intel Atom, it's an interesting form factor.
Just a shame they never released it really outside the USA, may have done well in other countries.

So all is not lost for Dell just yet. :)

Besides, the PC market feels like it's stagnant these days, a 7 year old PC is pretty much what most business's and home users need for only Email, Facebook and word processing which makes up the portion of the market.

Take a look at the Steam hardware survey which would give a good general idea of what gamers are running and about 50% of users are still sitting with a Dual-Core clocked at 2.7ghz or less, 4gb of ram or less and with only 50% of users running Direct X 11 capable hardware.

They need to give a reason for everyone to ditch their old PC's for something new.
Gamers will probably get that excuse when the new consoles launch and most games stop using the ancient Unreal 3 engine and hence push the PC's hardware.

RE: Hmm
By retrospooty on 1/15/2013 9:46:19 AM , Rating: 3
"Dell has shown it can still be innovative though."

Ya, I dont think its that they cant be innovative. Its just the people making product decisions have their heads up their asses. Year after year of "ya but" products. The XPS 13 looks fantastic "ya but" its screen is a low res piece of garbage. Every product they make has a "ya but". Make a nice product and people will buy it. Hell, if that XPS 13 had a higehr res screen and a good one at that, I would be all over it.

"Vista runs on Atom ... It's just no one uses it". -- Intel CEO Paul Otellini

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