Dell rumoured to be looking for a buyer

January 15, 2013 // 11:33 a.m.

Tags: #dell #financial #investment #investment-group #pc-market #post-pc #private-company #public-company

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.
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