Dell Shares Surge on Buyout Rumors (DELL)
Shares of Dell Inc. (NASDAQ: DELL) rallied nearly 13% on Monday following a report which said that embattled computer maker is in talks to go private.
According to Bloomberg News, unidentified sources, who are familiar with the situation, said that Dell has held talks with two private equity firms for a prospective leveraged buyout as the troubled hardware maker is struggling to retain investors’ faith.
Although the potential sale might not help turning around Dell’s flagging business immediately, it will provide freedom to the company to take more radical measures without any outside pressure (shareholders).
Nonetheless, a leveraged buyout (LBO) is easier said than done. A LBO could worth more than $20 billion; besides the Company has also piled up huge debts in balance sheet (estimated at $9 billion). In case, the company goes private then it will be a biggest technology buyout in the history. To date, biggest LBO was made by a consortium led by the Blackstone Group. The group acquired Freescale Semiconductor in deal worth $17.6 billion.
Meanwhile, a spokesman from Dell declined to comment over the story.
As more and more users prefer tablets and smartphones for internet surfing, Dell in order to overcome changing market dynamics has started to shift its focus away from its core business of personal computers and computer servers toward more steady and fast expanding business of equipping corporate data centers with hardware and software, lately.
However, Dell’s personal computers and laptop business still account nearly 50% of its entire revenue, which is a matter of concern as PC sales are declining fast every year.
Earlier on Monday, a study-report released from a market research form Gartner showed that Dell sold 37.6 million PCs, globally, in 2012, a 12.3 percent slump from the previous year’s shipments.
More Posts by this author
- Economic Outlook Continues to Improve but Sequester Can Spoil the Party
- Chevron Q4 Earnings Edge Past Street’s Estimate as Refining Business Flourishes (CVX)
- Gold Prices Settle Higher, Logs weekly Gains but Outlook Bearish
- Market Update After Hours February 1
- Stocks Rally on Economic Data; End Higher for the Week
- Gold Prices Settle Higher; Silver Prices Rise Sharply
- Stocks Headed for a Sharply Higher Finish; Dow Jones Above 14,000
 |
Post Written By: Ed Liston
Ed Liston is a senior contributing editor at TheStockMarketWatch.com. An active market watcher and investor, Ed guides an independent team of experienced analysts and writes for multiple stock trader publications. He is widely quoted in various financial publications on the Internet. When Ed is not writing about stocks, investing in stocks, talking about stocks, or otherwise doing something stock related, he likes to go sailing and fishing in his yacht.
|
