Dell CFO: Going private still an option
NEW YORK (CNNMoney.com) — Once the top personal computer maker, Dell has fallen behind some of its chief rivals and gradually has lost much of the luster that it had a decade ago. — Now, Dell is attempting to re-brand its business as a solutions provider …
Context & Ripple Effects
Dell enters November 2010 still trying to climb out of the hole it fell into during the downturn, when the New York Times documented how badly it trailed its rivals in the worst of times. Two years on, the company has lost its once-dominant PC position and is pitching itself instead as a solutions provider — a services-and-infrastructure story rather than a box-maker story.
Against that backdrop, the CFO's comment that going private remains an option matters less as a plan than as a signal: management is openly framing the public markets as one structure among several, at the exact moment the transformation strategy needs patience that quarterly earnings reviews do not naturally supply.
First-order effects
- Dell's public investors now have to price in a possible take-private bid, which caps downside on the stock and hands any acquirer leverage over valuation.
- The solutions-provider rebrand becomes harder to execute under public-market scrutiny if every quarter of PC decline reads as evidence against the strategy.
Second-order effects
- Rivals competing for enterprise infrastructure and services budgets can attack the transition window, arguing customers should not anchor long-term IT decisions to a vendor whose ownership structure is in flux.
- Private-equity firms watching large-cap hardware names get a template: depressed multiples plus a credible services pivot make leveraged buyouts plausible even at scale.
Third-order effects
- If Dell does go private, it would mark a structural shift in how legacy hardware companies fund multi-year pivots — off the public tape, where transformation timelines are judged by owners rather than by quarterly consensus.
- A successful take-private of a company of Dell's size would pressure other lagging PC-era giants to consider similar exits, reshaping which tech incumbents remain answerable to public shareholders.
The trend: Large hardware incumbents losing their core market are weighing ownership changes — private capital stepping in where public markets will not fund slow transformations.