Report: Dell May be Going Private
January 14, 2013 8:34 PM
comment(s) - last by
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
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.
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.
This article is over a month old, voting and posting comments is disabled
1/15/2013 1:43:39 PM
I think you misunderstand what's going on here.
There are downsides to being a public company. You're at the mercy of the mob. Investors generally want a quick return on investment and as a result they'll apply pressure to do things are bad for the company in the long run. For them, it's all about flipping a company. You have to answer to investors who are just looking to make a quick buck.
For example, have you ever wondered why so many publicly traded companies do things that give them a short term gain in exchange for a long term loss? You might think "why would they ever outsource production to China, sell off their factories, license their name for others to use (thereby diluting the brand) and then sell off pieces of the company until it's gone?" Because it's profitable to do in the short term and investors push them to do it.
Right now, you have all these companies falling for the cell phone/tablet craze. It will be short lived. Everyone is saying that tablets are the future of computing. A few years ago everyone was saying that netbooks were the future of computing, and a few years before that laptops were supposed to be the future of computing. There will always be a market for these devices but the average selling prices are falling quickly and the profit margins are getting slimmer. Remember, the craze isn't about customer demand, it's about corporate profit. There's a huge customer demand for toilet paper, also, it's just not a product that has a high profit margin.
Desktops were the future when they commanded a high profit margin. The profit margin dried up on them so they proclaimed laptops to be the future. The profit margin dried up on them so they proclaimed netbooks to be the future. The profit margin dried up on them so they proclaimed tablets to be the future. And now the profit is drying up on them too.
The truth is that computing is becoming more mature and the industry is running out of new frontiers. People don't need to replace their computers every few years anymore. Once all tablets are under $200 and have HD displays and fast CPUs there won't be a need to upgrade them until they break. Companies are going to have to shrink a bit since consumers aren't going to be spending the money on computers that they used to.
"There's no chance that the iPhone is going to get any significant market share. No chance." -- Microsoft CEO Steve Ballmer
Quick Note: Microsoft Announces 60 Million Windows 8 Licenses Sold
January 8, 2013, 5:30 PM
Dell Earnings Disappoint as PC Sales, Windows 8 Fail to Save It
November 16, 2012, 7:19 PM
Microsoft Launches Budget Lumia 640/640 XL; No High-End Devices Until This Fall
March 4, 2015, 9:10 AM
Finished Apple Watch Expected to be Showcased at"Spring Forward" Mar. 9 Event
February 26, 2015, 12:17 PM
Google Preps Pixel 2 ChromeBook, New X Server Replacement "Freon"
February 24, 2015, 11:12 PM
Report: Samsung Semiconductor Bounces Back w/ iPhone SoC and Memory Orders
February 24, 2015, 1:40 PM
Comcast Borrows Apple's Branding Flourishes for Its Remotes
February 24, 2015, 11:32 AM
NVIDIA Bows to Outraged Overclockers, Will Restore Feature in Upcoming Driver
February 23, 2015, 12:30 PM
Most Popular Articles
FCC Bans Data Discrimination, Defies Comcast, Adopting Net Neutrality Regulation
February 26, 2015, 4:03 PM
Google Steps up Snub of Adobe Flash, Auto-Converting Flash Ads to HTML5
February 25, 2015, 6:16 PM
Windows 10 Adds USB 3.1 for Dual-Role Peripherals, External Display Support
February 27, 2015, 11:39 AM
Australian Engineers Successfully Developed 3D-Printed Jet Engines
March 2, 2015, 11:08 AM
Smartphone STD Scanner Dongle Can Detect HIV in Just 15 Minutes
February 26, 2015, 11:04 AM
Latest Blog Posts
Sceptre Airs 27", 120 Hz. 1080p Monitor/HDTV w/ 5 ms Response Time for $220
Dec 3, 2014, 10:32 PM
Costco Gives Employees Thanksgiving Off; Wal-Mart Leads "Black Thursday" Charge
Oct 29, 2014, 9:57 PM
"Bear Selfies" Fad Could Turn Deadly, Warn Nevada Wildlife Officials
Oct 28, 2014, 12:00 PM
The Surface Mini That Was Never Released Gets "Hands On" Treatment
Sep 26, 2014, 8:22 AM
ISIS Imposes Ban on Teaching Evolution in Iraq
Sep 17, 2014, 5:22 PM
More Blog Posts
Copyright 2015 DailyTech LLC. -
Terms, Conditions & Privacy Information