Dell shares surged Monday afternoon on a Bloomberg News report that the PC maker is talking to private equity firms about a possible deal. This seems to be at least the second time that the company has considered such a move. Dell, also the company’s chief executive, told a Sanford Bernstein conference in 2010 that he had previously considered such a move, back when the company’s market valuation was about $27.5 billion. Read Bloomberg report on Dell.
With a current market cap just under $19 billion, according to FactSet, Dell might have a greater impetus now, even though the current talks are said to be very preliminary, and such a deal would still be a mammoth one.
While Dell has been trying to transition beyond its core PC business, the PC business just keeps getting worse. On Monday, new data from Gartner Inc. showed that fourth-quarter sales in PCs were even worse than expected, and Dell’s own sales fell even farther than its rivals. Gartner said Dell’s fourth-quarter units fell 20.9%
Dell still gets a bigger chunk of total revenue from PCs and laptops than its main rival, Hewlett Packard Co. (US:HPQ) . In its fiscal third-quarter results, the combined sales of desktop PCs and mobility, mostly made up of notebook computers, was 49% of total revenue.
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. And that transition will take time, give