Dell buyout would free execs from shareholder pressure, distraction

PC maker reportedly looking into going private again with leveraged buyout

By , Computerworld |  IT Management, Dell

And Rob Enderle, an analyst with the Enderle Group, said such a move could mean a lot of changes for the way Dell handles its business. "This would be a huge change for Dell," he said. "This could improve their bottom line significantly by reducing reporting and compliance requirements, and reducing overhead. It also would allow them to operate more strategically."

One problem, though, could lie with Dell's stock price. After reports that Dell might be eyeing a leveraged buyout, the company's stock jumped $1.41, or 13%, to close at $12.28 per share on Monday.

At 12:20 p.m. today, the company's stock was at $12.55 a share.

That kind of increase could be a problem, according to Olds.

"The biggest hurdle to making a leveraged buyout happen is Dell's rising stock price," he explained. "Already, there's speculation that major shareholders won't accept a deal for anything less than $15 per share. The stock is suddenly worth so much more just because of the rumor that Dell might go private. That's a huge change based on a rumor and a signal that this deal could be much more expensive than anticipated."

But if a deal does take place, Olds doesn't think it will hurt the company, the market or users.

"...There isn't much here that will impact Dell's products or services in the short to medium term," he said. "Dell isn't going away and there's no risk to consumers looking to buy a Dell product."

Sharon Gaudin covers the Internet and Web 2.0, emerging technologies, and desktop and laptop chips for Computerworld. Follow Sharon on Twitter at @sgaudin, on Google+ or subscribe to Sharon's RSS feed. Her email address is sgaudin@computerworld.com.

See more by Sharon Gaudin on Computerworld.com.

Read more about hardware in Computerworld's Hardware Topic Center.


Originally published on Computerworld |  Click here to read the original story.
Join us:
Facebook

Twitter

Pinterest

Tumblr

LinkedIn

Google+

Ask a Question