Can Michael Dell save his struggling PC empire?

The one-time leading global computer retailer has hit hard times. Now, Dell's founder reportedly wants to take his company private

Dude, you're not getting a Dell. And that's a problem for CEO Michael Dell's struggling PC giant.
(Image credit: Justin Sullivan/Getty Images)

Dell has seen brighter days. The world's one-time No. 1 computer company is now No. 3, behind HP and Lenovo, and its 10.2 percent share of the PC market is down from 12.2 percent a year ago. On top of that, the overall market for PCs, laptops, and netbooks — about two-thirds of Dell's business — is shrinking as consumers and businesses shift toward smartphones and tablets like Apple's iPad. Dell's computer shipments dipped 21 percent in the fourth quarter, and its third quarter profits were down a hefty 47 percent. So perhaps it's not surprising that Dell's stock jumped Monday on a report by Bloomberg that two private equity firms are considering a leveraged buyout of Dell, led by founder and CEO Michael Dell, who owns more than 15 percent of the company's stock.

Dell has considered taking his company private before, he told investors in 2010 — when Dell was worth about $27.5 billion. Now that it's worth about $19 billion, a buyout "makes a lot of sense," Topeka Capital Markets analyst Brian White tells Bloomberg. "The valuation on this stock is absolutely insulted." Michael Dell is easing his company away from a PC-dependent model, and he "wants to change the focus of Dell without having the microscope of a public stock." That sounds about right, says Therese Poletti at MarketWatch. "As Dell seeks to transition to other business areas such as storage, software, and services, it might be helpful to get out of the limelight."

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Peter Weber, The Week US

Peter has worked as a news and culture writer and editor at The Week since the site's launch in 2008. He covers politics, world affairs, religion and cultural currents. His journalism career began as a copy editor at a financial newswire and has included editorial positions at The New York Times Magazine, Facts on File, and Oregon State University.