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Dell's SEC report describes challenges for PC makers

John P. Mello Jr. | April 1, 2013
Dell described a bleak outlook for the PC industry on Good Friday in a document filed with the U.S. Securities and Exchange Commission.

Battling buyout offers

A group affiliated with a private equity fund managed by Blackstone and another group led by Carl Icahn both submitted buyout offers to the board's committee reviewing such offers.

Blackstone's deal includes a per share offer of $14.25; Icahn's, $15 a share. CEO and Chairman Dell's offer is $13.65 a share. All the offers would provide stockholders with a tidy profit, based on $10.88 per share price at which Dell stock was selling when news broke of a proposal to take the company private.

In high finance circles, the devil in deals like this is in the details, which is why the committee noted:

"The Special Committee has not determined that either the Blackstone proposal or the Icahn proposal in fact constitutes a superior proposal under the existing merger agreement and neither is at this stage sufficiently detailed or definitive for such a determination to be appropriate. There can be no assurance that either proposal will ultimately lead to a superior proposal."

"While negotiations continue the Special Committee has not changed its recommendation with respect to, and continues to support, the company's pending sale to entities controlled by Michael Dell and Silver Lake Partners," it added.

The committee said that CEO Dell is willing to "explore in good faith the possibility of working with third parties regarding alternative acquisition proposals"--a wise move, since, if Blackstone or Icahn acquired the company, its founder could find himself without a job.

However, since there's no timetable for ironing out what to do about the deals now on the table, Dell will likely helm his company for some time to come.

Microsoft joins in

In addition to Silver Lake, Microsoft has also thrown in with Founder Dell for the tune of $2 billion. That's led to all kinds of speculation about Redmond's intentions.

It's well known that Microsoft hasn't been totally satisfied with the quality of the hardware being produced for its software. That dissatisfaction led Redmond to produce its own Windows-based Surface line of tablets.

By buying a piece of Dell, Microsoft might be buying a bigger say over what kind of hardware is produced for its software, some Microsoft watchers have speculated. It could also mean that Microsoft is contemplating an exit from the tablet business somewhere down the road.

If CEO Dell can take his company private, he believes he will have greater freedom to take it where it needs to go if it's to survive in the post-PC era. That path includes the continued production of PCs, but with a heavy focus on the enterprise market.

However, Dell's investors believe he's low-balling them with his offer, which means the company is in for some interesting times as its board tries to reconcile the interests of everyone involved.


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