Dell in $24 Billion Deal to Go Private
Dell's share of the server market is still 22% of new shipments, but the article points out that the growth of the cloud server market has hurt that part of the business as well.[T]he buyout — which was announced on Tuesday and would be the biggest by far since the days of the recession — is a huge gamble. It will saddle Dell with $15 billion of new debt, and it does nothing to divert the forces reshaping the technology industry and undercutting the company’s business.
Fifteen years ago, Dell made enormous profits from selling customized PCs directly to customers. Six years ago, it was the world’s leading maker of personal computers. Today, it is in third place, behind Hewlett-Packard and Lenovo, and falling.
Dell’s share of an already contracting market for PCs slipped to just 10.7 percent last year, from 16.6 percent six years earlier.
Fifteen billion in new debt is an awfully large burden for a company in such a troubled industry as general-purpose computers are today. I've always liked Dell and have bought machines from them for two decades or more. If the market is going to end up split between HP and Lenovo, I'll choose the latter. People about to make some long-term hardware investments in their organizations might now start looking elsewhere even if they were a Dell shop in the past.
I notice that Microsoft was willing to lend Dell $2 billion but do not appear to have purchased an equity stake. I wonder if they were offered one but declined.