percent rise in Dell's stock price in heavy trading. The stock rose another
7.2 percent Tuesday, closing at $13.17 a share, its highest price in more than
Going private would give Dell the chance to revamp the company more thoroughly and complete the transformation journey it began five years ago.
During that time, Dell Inc. has spent more than $12 billion to buy more than two dozen companies with advanced technologies related to networking, storage, services and software.
The biggest acquisition was for Perot Systems, the Plano-based computer services company that was bought in 2009 for $3.9 billion. But a more recent big transaction for was California-based Quest Software, which was bought in September for $2.4 billion.
Dell needs to acquire more pieces to become the one-stop-shop in information technology that the company has been aiming for.
"Software is a huge focus," Enderle said. "In software, Dell is a lightweight."
Dell needs to push faster into software and advanced systems that generate bigger profits than the company's traditional core of commodity personal computers, analysts say.
Dell has been under earnings and revenue pressure in the past year, because the global PC market has slowed and price competition from Asian companies, including China's Lenovo Group, and Taiwan's AsusTek Computer, has increased.
As Dell's revenue and profits have shrunk over the past year, its stock price has dropped sharply. Dell's stock fell by more than 29 percent in 2012.
"The stock market right now thinks of Dell as a failed Apple," Enderle said. "But Dell wants to restructure itself as a new-age IBM Corp. It needs to have some time away from the market so it can transform itself."
The challenge, says Jim Nolen, a retired distinguished finance lecturer at the University of Texas McCombs School of Business, is that Michael Dell must build a much different company than the one he created in the 1980s.
"It's almost like starting a new business, because (personal computer) hardware is dead," Nolen said. "Yes, you built a great company, but it was a different business."
Dell, which employs about 14,000 people Central Texas, employed about 109,000 worldwide a year ago. The company has added workers in recent years as it has made more business acquisitions. Quest Software, for instance, had more than 3,800 workers before it was acquired.
But Nolen said some of those workers don't have the skills that the re-engineered company will need.
"Dell doesn't have the personnel to create some of the things they need going forward," Nolen said. "They could lay off people and hire new resources to go in the direction of being a software and services company."
Another challenge, Nolen noted, is that Dell has replaced several members of its senior management team in the past year. In December alone, the company announced the departures of Steve Schuckenbrock, president of Dell Services, and Darren Thomas, who headed the company's storage systems business.
Despite those setbacks, Nolen said he gives Michael Dell a good chance to pull off a turnaround.
"I like a guy that has skin in the game," he said. "He is going to work hard. His name is on the company. He is smart and he can surround himself with good people again."
Distributed by MCT Information Services
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