it sets sights on more profitable businesses and slowly pulls away from the PC
Critics of Michael Dell's bid to take private his namesake PC brand charge his $24.4 billion offer undervalues the company. Shareholder groups oppose the deal. And the latest moves from Blackstone and corporate buyout king Icahn suggest some money was left on the table.
"We intend to work diligently with all three potential acquirers to ensure the best possible outcome for Dell shareholders, whichever transaction that may be," Alex Mandi, chairman of a special committee of Dell board members, said in a statement Monday.
Del Prete contends Dell, in addition to scaling back its PC business, will need to pivot into profitable areas of services around security, networking and consulting.
Dell will also have to focus on tablets and smartphones, which have been a profit gusher for the likes of Apple, whose fortunes have played a role reversal with Dell's. Dell will definitely stay focused on Ultrabooks that run Windows, Del Prete says, and will likely flirt more with Google's Android on phones and tablets. "I would really look at the whole integration of tablet world in the enterprise," Bushnell says.
The proposal from Blackstone Group would offer $14.25 per share, while Icahn's plan calls for the repurchase of up to 58% of Dell shares at $15 a pop.
Both deals would also maintain Dell's standing as a publicly traded company.
Last month, Michael Dell and Silver Lake Partners announced a plan to take Dell private in a $24.4 billion deal, or $13.65 a share.
The proposal was met with fierce opposition, most notably from Dell's largest outside investor, Southeastern Asset Management. In a separate statement, Icahn Enterprises says it is "pleased" Dell will consider their proposal, adding the initial buyout plan "significantly undervalues Dell."
Corporate raiders and private equity are oft-cited as pirates scavenging troubled companies for booty. Such a reconfiguring of Dell in a privatization could allow new parties to take extreme measures, such as spinning off its PC business. That might lead to an uncertain future for Dell PC owners in the hands of a company new owner.
"Luckily, the number of disastrous leveraged buyouts in tech are fairly small," says says Forrester analyst David Johnson.
Blackstone has reportedly been wooing Oracle President Hurd to take the CEO seat at Dell. In such a musical chairs, founder Dell might land as the chairman to this new computer configuration, bringing two pivotal forces to the storied computer maker.
Hurd "is a man who understands all of the aspects of Dell's business," Del Prete says. "He's very focused on execution."
Hurd turned HP's fortunes and stock around following years of problems before his sudden removal. He was accused of sexual harassment by Jodie Fisher, an actress and marketing contractor who worked as a hostess for HP events. Hurd currently serves as Oracle CEO Larry Ellison's right-hand man.
The buyout battle arrives during a tumultuous time for the PC industry, as consumers abandon desktop PCs in favor of smartphone and tablets.
In the past 10 years, U.S. consumer sales of PC desktop sales have been shaved in half. Tablet ownership, meanwhile, has more than doubled in 2012, according to Forrester. The research firm forecasts 113 million Americans will own a tablet by 2016.
However, the struggles over Dell's fate could leave consumers wary. "Disruption is a bad thing," says Bill Kreher, senior tech analyst at Edward Jones.
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