Dell goes private in $24 billion deal: Smart move?

Dell announced on Tuesday that it would go private in a $24 billion deal, the company's most drastic step yet to maintain relevance in a tech market increasingly dominated by smartphones and tablets. The deal was orchestrated by a group of investors — including founder Michael Dell, private-equity fund Silver Lake, and software giant Microsoft — and was facilitated by loans from a handful of big banks.

The point of taking Dell private is to create some elbow room for Michael Dell to turn the company around without the intense scrutiny of shareholders. At the moment, the company's flagging PC business is still a top revenue generator, and Dell also runs a technology and services business for companies. The idea is to move away from PCs and focus on services, much the way IBM did to great success — the difference being that IBM did so years ago.

Plenty of skeptics are predicting a rough road ahead for Dell. As Ashlee Vance at Bloomberg writes:

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Indeed, Dell's inability to produce exciting products has been a real drag for the company. According to Kevin Roose at New York:

Dell's harshest critic, however, was rival Hewlett-Packard, which said it would be more than happy to pick up customers who will allegedly be left by the wayside as Dell tries to effect a turnaround:

Burn. Though, in all fairness, it should be noted that H-P is suffering from the same problems and is hardly a model of financial coherence at the moment.

Two related items: The deal to take Dell private is the largest leveraged buyout since 2007, which some analysts are already trumpeting as evidence that the market has finally revived its appetite for the type of massive takeovers that occurred with regularity before the Great Recession. Others aren't so sure. "This deal, for example, was aided by the investment by Microsoft," says The Wall Street Journal, "help not every buyout firm can regularly tap." Microsoft's investment is the other interesting factor. Analysts say the software giant is concerned that trouble for Dell could lead to reduced sales of Microsoft's Windows operating system. Microsoft's future role at Dell remains unclear, though some are speculating that it could guide Dell toward new, interesting Windows-loaded products.