Michael Dell's tough road ahead
Arranging a $24.4 billion buyout of his company is the easy part. There's also a declining PC industry and a fiercely competitive device market to contend with.
As head of a private company, Michael Dell will have the opportunity to tinker with his business model away from the prying eyes of Wall Street. Success, though, is not a given. The Round Rock, Texas, company was built on the personal computer, a business that has been eroding for years.
To make matters worse, Dell has been unable to regain the top spot in the PC market that it lost in 2006 to Hewlett-Packard (HPQ). In fact, as Engadget noted, Dell's position continues to worsen. Dell held 10.5% of the market in the third quarter, trailing Lenovo and HP.
Unfortunately, PCs still account for about half of Dell's business, and the company's efforts to expand its offerings have not gone well. For instance, Dell's Streak 7 tablet generated few sales and got awful reviews. Dell quit the smartphone business last year after lackluster results. The company's customer service problems have also been well documented by the press for years.
Michael Dell has joined forces with Silver Lake Management to take the company private. He's going to contribute his 14% stake in Dell toward the deal along with additional cash, according to news reports. In the press release announcing the deal, he said, "I believe this transaction will open an exciting new chapter for Dell, our customers and team members."
Sounds familiar, no?
HP reportedly is mocking Dell's plan, arguing that it creates uncertainty for its customers. But HP is in the same boat as Dell in many ways, and CEO Meg Whitman may one day have to follow her rival out of the public markets.
--Jonathan Berr does not own shares of the listed stocks. Follow him on Twitter @jdberr.
More on moneyNOW
Copyright © 2013 Microsoft. All rights reserved.
Quotes are real-time for NASDAQ, NYSE and AMEX. See delay times for other exchanges.
Fundamental company data and historical chart data provided by Thomson Reuters (click for restrictions). Real-time quotes provided by BATS Exchange. Real-time index quotes and delayed quotes supplied by Interactive Data Real-Time Services. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by SIX Financial Information.
While incompetent bosses like Michael Scott and Andy Bernard typically can’t survive in the workplace, office romances are a very real part of corporate culture.
- Southwest Airlines turns less legroom into $773M
- 'American Idol' gets sorry ratings for season finale
- Powerball's wacky sense of humor
- Millions of Facebook's users are actually pets
- Can crowd funding rescue the LA Times?
- Domino's debuts a DVD that smells like pizza
- Average US retirement age climbs to 61
- McDonald's aims to slim down its 145-item menu
- Bathroom reading goes digital with iPad TP stand
[BRIEFING.COM] The S&P 500 ended this week with a bang, roaring to a new all-time high on the back of stronger-than-expected economic data, influential leadership, and an ongoing appreciation for the Fed's monetary policy support.
The bullish bias was evident in premarket action as the S&P futures pointed to a higher start without the benefit of any definitive news catalyst. Stocks indeed benefited from a blast of buying interest at the opening bell on this ... More
More Market News
All hail the bull market, which ended the week with a big rally. But it also is starting to look a little like 1987, which suffered an epic blow-out.