Last night, behind closed doors, Dell founder and CEO Michael Dell successfully managed to return control of the computer giant from public ownership to private hands. The deal is complicated, involving a number of investment companies; Dell himself was forced to put his money where his mouth was, plying stock ownership and personal finances in order to finagle a deal.
Shareholders who currently own Dell stock will receive $13.65 for each and every share – that’s a little over 25% more than Dell’s stock was worth on Jan 11th (the last day before rumors started circulating), in a deal that the participants are quoting at over $24B.
Some of that help comes in the form of a $2 billion loan from Microsoft. In Microsoft’s eyes, that’s $2 billion well spent. While Dell may be suffering in the eyes of fans, they’re still one of the principal providers of computer equipment in the business sphere – especially when it comes to desktops and workstations.
Dell (both the company, and the man) need the freedom that going private offers in order to respond more nimbly in the marketplace. When you’ve got shareholders breathing down your neck, you’re obligated to make decisions that maximize immediate profits at the risk of deflating long-term potential.
For Dell, that means taking a broader look at the future of computing – so far, they’ve realized that that means back-end infrastructure, Software-as-a-service (SaaS), IT support, you name it. While it’s stemmed the flow, the hole is still there, and Dell needs this flexibility to make riskier decisions if they expect to stay around.
HP didn’t miss the chance to comment on all the goings-on, sending out this critical note with a nationwide press announcement:
“Dell has a very tough road ahead. The company faces an extended period of uncertainty and transition that will not be good for its customers. And with a significant debt load, Dell’s ability to invest in new products and services will be extremely limited. Leveraged buyouts tend to leave existing customers and innovation at the curb. We believe Dell’s customers will now be eager to explore alternatives, and HP plans to take full advantage of that opportunity.”
Snarky, but perhaps the right course of action to take – now that Lenovo has crept ahead of HP in the worldwide PC rankings, HP has managed only a few faltering steps from the executive chaos of the past two years. They need all the customers they can get.