Dell computer company’s founder takes over firm

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This article was published 13/09/2013 (3884 days ago), so information in it may no longer be current.

MICHAEL Dell has won control of the computer company he started in an Austin dorm room nearly 30 years ago, buying the beleaguered PC maker Thursday from its public shareholders after a months-long boardroom fight.

Now the real challenge begins. In the years since its launch, the company has lost its footing as competitors emerged with cheaper desktop and laptop computers, and its core audience migrated to hand-held devices such as tablets. Dell’s stock has lost more than 25 per cent of its value during the past five years.

Michael Dell, who will be chairman and chief executive of the newly private firm, said it will fare better without the pressure of meeting Wall Street expectations. “As a private enterprise… we’ll serve our customers with a single-minded purpose and drive the innovations that will help them achieve their goals,” he said.

The company’s shareholders approved a $25-billion sale of the firm to Michael Dell, who partnered with investment firm Silver Lake Partners to secure the deal. The deal is expected to close within a few months and must be approved by regulators.

The shareholder approval comes after a protracted battle between Michael Dell and prominent investor Carl Icahn, who made his own bid for the company. In a letter to shareholders, the notoriously outspoken Icahn said he believed the deal, which offered $13.75 per share for the company, undervalued the firm, and that despite dropping his own buyout bid, he still opposed the agreement.

Michael Dell will face a staggering set of challenges in rebuilding the Round Rock, Texas-based company. The company’s profit dropped more than 70 per cent during its most recent fiscal second quarter compared with the same period the previous year. It was once a market leader, but it now captures just about 12 per cent of worldwide PC sales.

Demand for PCs has plummeted as consumers delay buying a new computer and opt for a tablet. The International Data Corp. analysis firm projected Thursday tablet sales would overtake PCs this holiday season for the first time.

Ahead of the Dell announcement, Standard and Poor’s lowered the company’s credit rating, citing the pressures Dell faces in its “primary business segments.” In recent years, Dell has invested in research and development to launch fresh products such as super-light ultrabooks or laptops with flexible forms. But it has lost ground to firms such as Lenovo and Hewlett-Packard.

Howard Anderson, a senior lecturer at the Massachusetts Institute of Technology’s Sloan Management school, said Michael Dell has more flexibility to remake the company, which he knows inside and out.

 

— Washington Post