Dell to go private in $24bn deal PC Slump Spurs Biggest Leveraged Buyout Since Financial Crisis In ’08

 Dell, the world's thirdbiggest maker of personal computers, is going private in a deal valued at $24.4 billion, undertaking the biggest leveraged buyout since the financial crisis. 

    Chief executive officer Michael Dell and Silver Lake Management will pay $13.65 a share, the companies said on Tuesday in a statement. That's 25% more than the closing price of $10.88 on Jan. 11, the last trading day before Bloomberg News reported the discussions. Michael Dell is taking back majority control of the company he started almost three decades ago. 
    The stock has lost more than half its value since January 2007, when Dell resumed his role as CEO, amid investor dismay with management's failure to cope with upstart competitors in mobile and cloud computing. By going private after a quarter-century as a publicly traded company, Dell is seeking more leeway to cut jobs and adopt strategy shifts needed to court highmargin customers spending billions on data centers. 
    "They obviously see the writing on the wall," said Daniel Morgan, a senior portfolio manager at Synovus Trust. in Atlanta. "They understand what the challenges are and realize they need to refurbish what they are doing." 
    Even as being private shields Round Rock, Texasbased Dell from answering to public shareholders on a quarter-by-quarter basis, it subjects the company to new constraints, including the addition of debt. Following the transaction, Michael Dell will be chairman and chief executive, maintaining "significant equity," according to the statement. 
Microsoft is contributing $2 billion, according to the statement. Silver Lake, a technology-focused private-equity firm, was working with partners to line up about $15 billion in funds for the buyout, people familiar with the matter have said. Dell, which trails Hewlett-Packard and Lenovo in the PC market, was halted in US trading. Its stock plummeted 31% last year as it struggled to adapt to the industry-wide shift to smartphones, tablet computers and cloud computing services. 
    Consumers and companies are shunning PCs in favor of mobile devices made by Apple and Samsung, and Dell lags behind Oracle, Cisco and IBM in data-center hardware, software and services. 
    Dell has seen its fortunes rise and fall since holding an initial public offering in 1988. CEO Dell, who founded the company with $1,000 in 1984 in his University of Texas dorm room, was viewed as an industry wunderkind, demonstrating that he could sell complex products more efficiently and conveniently than was thought possible. 
    By cutting out middlemen and honing manufacturing so companies and consumers got exactly the PC configuration they wanted, Dell grabbed share and piled up profit even with lower operating margins than rivals like IBM and Compaq Computer Corp., fueling an almost two-decade boom. Eight years after the IPO, Dell's stake was worth more than $1 billion. 
    Dell ceded the CEO role to Chief Operating Officer Kevin Rollins in 2004 only to come back to the helm in 2007 after the company lost its top PC spot to Hewlett-Packard and earnings fell short of estimates. The company was also beset at the time by an accounting scandal that later resulted in a $100 million settlement with the U.S. Securities and Exchange Commission. 
    Since his return, Dell has talked publicly about "pruning" his PC business while using the cash it generates to snap up companies in computer networking, storage, and enterprise software. 
    Global PC sales fell 3.5% last year to 352.7 million units, market researcher Gartner said. Dell's market share fell 12.3% to 10.7%. BLOOMBERG 
CTRL+SHIFT+DEL(L)ETE 
NEW LOGIN 
    CEO Michael Dell is taking back majority control of the co he started 29 yrs ago 
    Michael & Silver Lake Mgmt will pay $13.65 a share, Microsoft will pump in $2bn 
REBOOTING BUSINESS 
Dell stock has lost more than half its value since 2007 
Co failed to cope with industry-wide shift to smartphones, tablets While PC shipments fell 6.4% in Oct-Dec to 89.8m units, tablet shipments soared 75% to 52.5m units Apple shipped 22m iPads compared to 15m personal computers shipped by HP 
Since 2010 when Apple launched iPad, tablet sales have grown to 117m in 2012 while PC sales remained stagnant at 350m units 
MICHAEL'S ROAD MAP 
    Michael is widely expected to use the leeway he'll get by going private to cut jobs, costs 
    He may also change tactics to court high-margin customers spending billions on data centres 
BORN IN DORM ROOM 
1984 | Michael Dell, a 19-year-old, pre-med college freshman, starts selling assembled computers out of his dorm room at University of Texas in Austin 
1988 | Name changed to Dell Computer and goes public, raising $30m and increasing m-cap to $85m 
1992 | Co debuts on Fortune 500, making Michael the youngest CEO on the list at 27 
1996 | Dell.com launches, hits $1m in daily sales in six months 
2006 | A battery recall after a Dell laptop catches fire dents image 
2009-10 | Makes a slew of acquisitions 
2010 | Dell starts selling the Streak, a 5-inch tablet, subsequently considered a flop

Michael Dell Gartner