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Dell rumoured to be looking for a buyer

Dell rumoured to be looking for a buyer

Dell may be looking to return to its days as a privately-held company, with sources claiming talks are ongoing regarding a buy-out by an investment group.

Dell is claimed to be in talks with a pair of private equity firms as it looks to find a buyer and go private in the face of slumping PC sales.

Dell has been a victim of the recent slump in the PC market, which has dropped even beyond worst-case estimates with the usually lucrative Christmas sales period seeing a 6.4 per cent drop world-side compared to the same time last year. According to figures released by research firm IDC, Dell bore the brunt of those losses with shipments dropping 20.8 per cent year-on-year - beaten only by Acer, which saw its own shipments drop a staggering 28.2 per cent compared to the same quarter in 2011.

That kind of loss, at a time when sales are traditionally at their strongest, is enough to make investors nervous - and Dell is claimed to be looking to bail on its status as a publicly-traded company with a lock, stock and barrel buy-out by a private investment group.

The claims, as yet uncorroborated by any statement from Dell itself, come from two anonymous sources 'with knowledge of the matter speaking to Bloomberg. According to said sources, Dell is looking towards investment groups TPG Capital and Silver Lake for a finance package that would see the company held privately for the first time since its initial public offering in 1988.

Things have changed since that day, however: where Dell raised $30 million in investment cash from its 1988 IPO and hit a market capitalisation of $85 million, the company is currently worth $21.35 billion - not bad for a company started as a one-man band in 1984 with $1,000. Dell's current market capitalisation has been helped by a massive surge in share price as investors sought to capitalise on the buyout rumours, pushing the company's share value up 12.96 per cent in a single day of trading.

With the PC market slumping - and some in the industry claiming that we're entering a post-PC era where tablets, smartphones and convertible devices rule the roost - and the global economy still struggling to climb out of the doldrums of recession, it remains to be seen whether either of the investment firms will be able to drum up the cash required to take Dell private once more. Should the expected deal fail to materialise, investors who piled onto the company's shares in the hopes of a quick profit will likely abandon them in droves - adding to Dell's woes.

For Dell, whose attempt to branch out from its image as a dull shifter of plain boxes and servers for office types included the 2006 acquisition of gaming PC specialist Alienware, the following months are likely to be interesting indeed.

18 Comments

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Anfield 15th January 2013, 14:52 Quote
Profit margins on the standard issue 15" laptops are rock bottom, proper pcs don't sell, dell has pretty much given up on the tablet / smartphone market and their dirt cheap looking plastic cases on most stuff give the brand a poundshop reputation, so really they are missing the mobile revolution and missing out on the lifestyle crowd that apple attracts.

So what does that leave them with? Businesses who buy dell desktops out of habit and their attempts in the server business.
However Businesses are holding back on investments in IT due to the global economy still going down the drain, plus there is the problem that you can easily ruin the latest software on ancient hardware, hell something like an E8400 is still plenty fast for office use.

So not really surprising to see them looking at a very major overhaul.
Si_the-dude 15th January 2013, 14:53 Quote
They surely can't be short on cash, they must have a monopoly on offices. I'm curious to see if anyone expresses interest. Hopefully HP will steer clear!!
theshadow2001 15th January 2013, 15:03 Quote
Any company who is selling computers to a consumer market and hasn't adjusted their supply towards phone and tablet items is bound to struggle. The pc production should have been scaled back in line with the inevitable pc sales decline and those resources moved to electronics that people are actually buying. The drop off in desktop sales is no surprise. Anyone who didn't expect it is clearly living under a rock on Mars. Anyone who thought that a new windows version would make a significant impact on pc sales must be living under a similarly located rock. Especially since you could upgrade a recently bought windows 7 machine for very cheap.

I agree that dell have a bargain bin image. If someone buys the company expect either a brand over haul or further delve into the bargain bucket end of the market.
TheDodoKiller 15th January 2013, 16:59 Quote
Group buy, anyone?
Si_the-dude 15th January 2013, 17:05 Quote
1/2 billion US dollars split between 54,000 members = APPROX 9000 dollars each

........... (checks pockets). LOL
GoodBytes 15th January 2013, 17:30 Quote
Laptops and Desktop computers aren't dead. Desktop market has shrunk a lot, but Laptop are still relevant. What Laptop has that tablet don't, is a a more confotable setup to use, more power, more battery life (sadly this is not the case today, but it is douable).

Right now, people go with tablets, as laptops sucks, and Desktop are meh, OR goes buy a MacBook Pro or iMac, as they are the most powerful and highest build quality systems on the consumer market, and also they are not a monstrosity with minutes of battery life like gaming laptop (more like portable desktops).

Here is what I think Dell should do, to be relevant on the market:
-> Have 4 desktop: All in one, High-End Home, Med range Business, and Workstation
-> Have 5 laptops like now: Low-end Home, High-end Home, Low end Business, High end Business, and portable workstation.
-> Home warranty service make it the same quality as Dell Business.

-> High End Home laptop -> XPS -> High resolution screen IPS panel, Core i5 or i7 options, 4GB of RAM minimum, drop the price of SSD upgrade, have DisplayPort, Gigabit Ethernet, USB 3.0, 9hou of battery life with a 9-cell battery option, that doesn't not lift the laptop, quiet operation with smart cooling engineering and quiet fan(s). Med-range to high-range Nvidia or AMD GPU options. Magnesium alloy contruct, like the Latitude E series, NON-chickless keyboard, backlit, glass surface touchpad, 3 YEAR warranty minimum (with a big push on that), metal hinge system, no more Alps touchpad, no more IDT sound chip, and finally, hire designers.. with good tastes, and make a proper looking one. Non glossy screen should be an option.

Price should range between 1500$ to 3000$. No more Alienware (as this series will replace it). Laptop size should be: 10-12inch* (I'll get to that), 14inch OR 13inch, 15inch.

10-12inch model are a tablet, using Intel GPU.. but the like the ASUS transformer, it can be plugged to a keyboard that not only provides a keyboard, and battery, but also have a Nvidia or AMD med-low range GPU (optional, for those who don't need it can have the Intel GPU). So now you have a portable tablet, but also if you need the GPU, you can attach the keyboard.

-> Low-end laptop Home - Inspiron: Can be made of plastic, but not glossy, TN panel, but still high resolution, or the reverse (IPS but low resolution), Intel GPU only, HDMI out only is fine, 2 year warranty (to push consumer in thinking that this is not like before, and that this laptop will last), standard keyboard and the rest. No IDT sound chip, No Alps touchpad. 14 and 15inch version should be available
Price should be 800-1500$

Warranty extension is a good. It allows the consumer to think that the product is higher quality, especially when advertise it. Also, its essentially included in the price, and like any warranty extension, it boosts profits. The low-end system option isn't pushing boundaries, and everything is normal, nothing really special in terms of specs, making idea to charge a high than normal price system, providing increase profit.

-> Desktop High-end home - XPS: Provide better GPU options, keep the price the same, make the system much quieter, include as option high current PSU with dual PCI-E power connector, offering users to be able to upgrade their GPU later on. It is a gamer system after all. Inside should be clean and nice.

Business class system should be similar to Home, but even better build quality for their low and high range system, better looking than what it was now (hire designers!), all monitors should be non-glossy as it is now, warranty the same, VGA ports on both models (a must for businesses, still today, sadly), and business features.

All systems of Home comes junk free, and provide as options: Recovery disks, and OS disk. It is fine if you pay more for them.

Desktops for business needs to be cleared. Waaaayyy too many models under the Optiplex series.

Also,
-> They need to reinvent the image of the company. That means: Drop the Inspiron and Vostros name, and NO OPTIPLEX, find new names. For those who don't know, Dell fell into a bad contract with the capacitor provider (like many companies), and received inferior capacitor that broke easily. This destroyed the Optiplex series name. New name, and all business class system should come with solid capacitors exclusively, and should advertise that. Even if most people won't understand what it means.. just say Using solid capacitor 50 000 hours operation, made in Japan, like what Gigabyte does, even thought "made in Japan" means nothing... like anything made anywhere, it can be crap or good.. that's not the point.. it sounds good.

As for the all in one systems. Do like HP all in ones
7OAji8R-_jQ
See this video and product wants to make me buy one.. like rigth now. Its a shame it has flaws:
-> No touch screen option
-> No digitize screen option (also the stand must have a look option, and fall in more flat by coming close to you when put in flat, so that you can rest your arm better when you draw).
Other than that, looks awesome.

Of course for home, remove the fancy Quadro, and put an optional Nvidia or AMD low-med range GPU like Apple, and you can remove the easy serviceable options. But IPS panel and proper 27inch resolution should continue to be used.

This is what I would do if I had Dell in my hands. What do you guys think?
rollo 15th January 2013, 17:59 Quote
Shrinking Consumer PC market towards Tablets and smartphones suggests dell may have problems.

There is not alot of people left who dont own a computer already in the 1st world countrys you only really need 1 computer no point buying a new one when the current one works.

if you got your hands on dell they would be bankrupt a long time before your reimage comes to light.

1. Alienware brand has made Dell Cash and alot of it if you look at the financials for the last year.

2. The big business that foke on here are trying to get them to avoid is 50% of there total revenue.

3. Servers are where all the profits are for the IT sector, alot of Dells profits come from this sector more so than HP.

4. People who want an all in one computer will buy a mac.

5. Ultrabook sales suggest laptop market is indeed dead, If you combine them all together ( removing apple) they = the total macbook air that are sold buy apple in a year and its not alot between 2-4mil units per quater. Thats from about 10 companies selling high end laptops. ( and 8 of those companies are loosing money acording to financials)

6. The market for a specialist gaming laptop is smaller than the market for an ultrabook.

7. Not up to dell to find a solution to battery life and to expect a laptop to last the time a tablet does is crazy.

Dell are probably not short of cash

but for Feb 2012 they lost 61mil dollars. Feb 2011 they made 3.2billion dollars.

Guessing they are expecting Feb 2013 to be a bloodbath.
KayinBlack 15th January 2013, 18:09 Quote
Strange, in the last two years I've bought quite a lot of kit from Dell, as it's actually better than what I'm getting in the enthusiast market. Power supplies from their top-end workstations and gaming machines are flat out amazing. When I wanted a new dually, I picked up a used Precision T7400, as it's not only a lot more to build similar, I would have lots of problems engineering such a flexible platform. I guess I'm just the minority, but I hope the new workstations end up being as awesome when they get into the range I can afford one.
Silver51 15th January 2013, 18:13 Quote
I've been on the Dell website recently, looking for a new laptop. Unfortunately I didn't find anything that matched my criteria at the right price point. Basically, I can get a machine with an i7 and GTX660M for less money from their competitors in a better looking chassis.*

The XPS 12 did pique my interest, as did the Lenovo Yoga. The ability to convert the laptop into a heavy-ass tablet would have it's uses and make a little more sense of Windows 8. Unfortunately, Atoms, i5's and Intel integrated graphics are completely useless. If they offered a 15 inch version with the right hardware 'shutupandtakemymoney.jpg', but I don't think the market is going in that direction.


*Importantly not a 'gaming' chassis. Most 'gaming' laptops look like a 12 year old vomited LEDs over a Gundam toy.
GoodBytes 15th January 2013, 18:49 Quote
I agree with you. But considering that they used to put what you are looking for.. or maybe it would be a GTX 640M-650M (adapted to today specs) instead, in a 12inch laptop, with a powerful Core 2 Duo (so Core i7 now), and still be quiet, with the fan rarely spinning, and 9h of battery life with the 9-cell battery. That was 6 YEARS ago! Where processors were much hotter than now, and consumed much more power.

Why isn't it possibly to do this now? Why not in a 13-14inch laptop with those specs at least (to try and make it thinner). 15inch is way too big in my opinion. 14inch is the max I would go for a laptop. 15inch is way too heavy, bulky.. feels like I am crying a desktop.
Silver51 15th January 2013, 19:12 Quote
I guess 15 would be a bit much for hand-holding, but I figured that laptop mode could be used for gaming at friend's houses and tablet mode could be used on a desk as a secondary system to my computer. It'd be ideal for recording audio, where I could just poke the screen rather than fiddle with a track pad.
Anfield 15th January 2013, 20:11 Quote
Quote:
Originally Posted by GoodBytes
Laptops and Desktop computers aren't dead. Desktop market has shrunk a lot, but Laptop are still relevant.

Look at what kind of Laptops are selling though, £200 - £400 low quality 15" standard issue ones, can't be much profit in those as every dick and harry is selling them at cut-throat prices.

As I said before, the cheap plastic cases and some incidents with low quality make it hard to sell the profitable lifestyle gadgets Apple makes billions with. Simply put, no one would ever put a Dell desktop on a desk and think it looks good and if you have to hide it anyway you at least want it to be cheap (and with it low profit for the manufacturer).

Remember the ill fated Dell Adamo? how many people do you know who would choose that over a MacBook Air? To sell a premium product you need a brand that is associated with premium, not one that reminds people of the 10 year old el cheapo desktop in a flimsy plastic case at work.

As you said (in a lot of detail) they pretty much need to redo their entire lineup from scratch and come up with new product names.

Although funny enough, I couldn't be happier with my ancient 16:10 24" Dell monitor.
SexyHyde 16th January 2013, 03:59 Quote
Dell is EOL. They made their money selling computers that weren't upgradeable and had a relatively short life span. Most people have moved on to other brands if in the market for a laptop or gone for a tablet if appropriate. I don't know why people feel the need to save things that now no longer have a place. If Dell had responded to the changing market maybe I would feel different, but they didn't, and there are plenty of companies doing what people want.
GoodBytes 16th January 2013, 04:21 Quote
That is not true. Then again you get what you paid for. You got a 300$ laptop, you get a 300$ laptop that will last what a 300$ laptop will last... 1-2 years.

But in general Dell products last a very long time. 5-6 years even 7 years, easy.
Dell monitors are extremely competitive, and have a very high reputation of reliability.
Dell also has the least amount of junk per-installed on their system, even the low end models.
Also, Dell doesn't care what OS you have, changing the OS won't void the warranty. With Toshiba, and Lenovo home computers, if you update to a new version of Windows -> warranty voided.

HP for years and years they produced laptop and desktop that didn't pass 1-2 years before something breaks or completely breaks down.
SexyHyde 16th January 2013, 07:04 Quote
The Dell monitors I agree with, but I get more people moaning about Dell laptops breaking. Toshiba and HP laptops of a similar price tend to last a lot longer from what I have seen, for say the last 5 years.
Optimaximal 16th January 2013, 17:13 Quote
Quote:
Originally Posted by SexyHyde
Dell is EOL. They made their money selling computers that weren't upgradeable and had a relatively short life span. Most people have moved on to other brands if in the market for a laptop or gone for a tablet if appropriate. I don't know why people feel the need to save things that now no longer have a place. If Dell had responded to the changing market maybe I would feel different, but they didn't, and there are plenty of companies doing what people want.

Dell moved out of the 'non-upgradable' market nearly 10 years ago. The fell into the BTX market for a spell before that was killed but have been producing standard ATX kit for the better part of 5-6 years.

They also did respond to the market - they were one of the first to market with both Android tablets (Streak) and Windows 7 Phone - and they've thrown some mega products out there if you look for them.

The problem is, nobody wants to buy desktop computers or laptops at the moment because they're happy with Windows 7, don't want 8 or are saving for an Apple. Also, like the motor trade, it's a self-defeating market that tries to offer extremely reliable goods but demands semi-yearly product churn so that the companies exist when it comes to finally changing.
mdshann 16th January 2013, 18:47 Quote
I agree with you on toshiba being pretty good, at least they get them fixed and back to you quickly when they break. We sell Asus and Lenovo in my shop and have only had customer-caused incidents with them. We see Dells and HPs all the time with motherboard issues, especially HPs. One customer I checked in this morning was telling me she had the motherboard replaced 3 times under her 1 year HP warranty. The Dell Inspiron line from the last 2 generations have horrid build quality, especially with the hinges. The hinges themselves don't break, but the screws pull out of the PLASTIC frame of the laptop.
KidMod-Southpaw 16th January 2013, 19:02 Quote
I'd say that Dell's business grade items such as monitors are brilliant, as is their customer service and warranty to go with them. The flat out consumer PC world stuff however...
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