Dell reportedly looking to going private

There may be some major news that could, or could not, be breaking very soon. Dell, one of the world's biggest PC makers, had its stock trading halted briefly as rumors  hit the wire that the company is looking to go private, perhaps with the company's founder and current CEO Michael Dell teaming up with some unnamed parties to take the PC maker out out the public business market.

Bloomberg reports, via unnamed sources, that two private-equity firms may be involved in taking Dell private. Michael Dell has said in the past that he has thought about taking the PC maker private. Bloomberg adds that a number of major banks have also been contacted to help finance such a deal. Bloomberg does report that these talks could fall apart if the money cannot be found.

Dell is so far not commenting on these rumors. However, Dell's stock is going up as much as 15 percent on these rumors after trading on the stock resumed.

Michael Dell founded Dell in 1984 while he was still a student at the University of Texas at Austin. He helped to grow the company into what is now the third biggest PC maker in the world. He stepped down as CEO in 2004 but returned to lead the company in 2007.

Source: Bloomberg | Image via Dell

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+1 for Dell.

In my case, i run a smallest micro-corporation (obviously not a IPO) with some relatives. However, a year ago, i purchased the rest of the business and now i am the sole owner of the business (owner and responsible). It is still a familiar business but i can pick decision directly, also i can deal with the bank more easily.

To be honest I'm more and more in favour of companies going private rather than publicly funded... no more answering to shareholders if you don't have an increase in profit year on year!

Not entirely true. Private companies still get funding from somewhere, and they have to answer (and show a profit) to those people. I worked for a company that went from public to private, and we still had to make the bank happy. They're less finicky and more open to long-term strategies though which is a definite positive.

Fezmid said,
Not entirely true. Private companies still get funding from somewhere, and they have to answer (and show a profit) to those people. I worked for a company that went from public to private, and we still had to make the bank happy. They're less finicky and more open to long-term strategies though which is a definite positive.

That's the problem when a business has debt.

Think of a debt-free business. The owners would have peace of mind. Don't have to deal with debtor anymore.

szo said,
Apple fans are going to have a field day with this news!

http://news.cnet.com/2100-1001-203937.html

why? In 1997 Apple was a struggleing company with no new ideas... generally everyone thought Apple was a dead man walking.... if it wasn't for the revamped lines from MS infused capital Apple probably would of died off... the iBook and the iPod saved the company and the iPod didn't really do that until they made it available for windows also, originally the iPod was Mac only

I'm well aware of this! I just mentioned that apple fans are going to make fun of what Michael Dell said at that time and if you haven't noticed with the other sites such as the verge, engadget.. they're mocking Michael Dell about what he said! Regardless, I never said that I agreed with this! I just merely pointed it out!

Would be cool if they did.

They are transitioning into a Services company, and as such being privately held would allow them greater flexibility in strategy.

For my love of their Quest Software acquisition, I hope this is true.

Right now, Dell is a publicly traded company, meaning you, or anyone, can go buy a share of stock. Dell wants to go private, meaning, make it so that you can't buy stock in the company. To do this, they have to buy all the stock out on the market which requires a lot of capital.

King Mustard said,
What does this mean?

I don't know enough about business to understand.

Basically they would have to buy all shares of stock back from their shareholders, and they would no longer be listed on a stock exchange.

For them, it's probably a good move since they haven't been doing great as a company and the stock price has been damn near halved over the past year. Perhaps they don't envision strengthening and don't want to risk being bought-out for a cheap price (since a company is partially valued at what the stock price sits at).

The downside is that they won't have any of the stock money to tap into, so they can't invest in anything major anymore.

Yup, owning stock in a company means you are a part "owner". I get mail from the companies I'm invested in because I get to cast votes when the company makes major decisions. It's usually about voting for re-electing the board of directors, but I've also gotten to vote on whether to fight a company being bought out.

The incentive is that you can make a good deal of money from stock if the price goes up. Also, many stocks offer dividends which is a percentage of the share price that the company straight up gives you. So for instance, I get an annual 4% dividend from Intel. I also own a stock that pays me a 17% dividend, but that one is my secret.

If you have disposable income, investing in stock can give you a much much higher return than letting it sit in a bank. This income is also taxed at a lower rate since it's a "capital gain". As long as you follow the principle of buy low, sell high, it's a pretty easy system to make money. The risk of that is pretty obvious though, and it's also not hard to become "married" to a specific investment.

It could provide them more financial stability. Right now they have to rely on us (general public) to buy their stocks to keep the company afloat. If they go back to private, it means they will generate their own money instead of relying on us.

It means they can base their strategy on sustainable long-term goals, rather than short term gains which finicky shareholders usually demand.


Let's put it this way: If you own your own company, you can say "If I go through with this plan, I'll be in a good position in 5 years."

If a bunch of other people own your company, they can say "I don't like your plan. Ditch it. We want X amount of dollars in 6 months."

King Mustard said,
What does this mean?

I don't know enough about business to understand.

It means peace for them,
as they don't have to deal with Wall Street anymore.
No more stock price fluctuation news that would only bring worry, fear, uncertainty, and doubt.