Dell opens fresh chapter with buyout approval
By
Nick Wakeman
Dell's shareholders approved the $24.9 billion management-led buyout that will take the company private. Free from Wall Street, the retooling of Dell is about to begin in earnest.
Interesting juxtaposition as a symbol of new technology – Twitter – announces it is going public on the same day that a symbol of the old – Dell – decides to abandon the public markets.
I don’t really have an opinion about Twitter, other than it’s become an important communications tool for many. I’ve used it in fits and starts over the years. Right now, I’m not very active.
Dell, though, is another story. The company was once an example of how to do just about anything right with its direct sales model and revolutionary supply chain management systems.
But while those are still strengths, competitors followed and can boast their own efficiencies. It is no longer a differentiator, especially when the main product – PCs, served so well by those systems – is in decline.
So now Michael Dell gets a chance revamp the company as Dell’s shareholders approved a $24.9 billion buyout yesterday led by Dell and the investment firm Silver Lake Partners.
The idea is that, freed from the scrutiny of Wall Street, Dell’s management team can make moves that it couldn’t otherwise. It'll be able to take risks and move more quickly without worry about short-term returns. This will be a project that will be measured in years, not quarters.
The big question will be what moves those will be. Unlike its chief competitors – Hewlett-Packard and IBM – Dell hasn’t pulled off a blockbuster acquisition. Not that HP's and IBM's haven’t been pain-free.
Early indications are that Dell will keep its PC business, but look for some major restructuring ahead. Undoubtably there will be new products and solutions around mobile, cloud, cyber and big data, but services also will be crucial.
The approval of the buyout removes a huge cloud of uncertainty from the company because the soap opera of last year, around whether the buyout would succeed or not, is over.
The deal will be completed sometime next year after regulatory reviews, but we’ll see moves before then. Wall Street or no Wall Street, there is no time to waste.