) voted in favor of the $24.9 billion privatization bid by
Michael Dell, founder of Dell, and Silver Lake Management during
the special meeting held on Sep 12.
Moreover, the Dell board announced a quarterly cash dividend
of 8 cents per share to be paid on Oct 22. The deal is expected
to be closed before the fiscal third quarter of 2014.
As per the privatization arrangement, the shareholders will
receive $13.75 per share and a special dividend of 13 cents per
share. The private buyout initiative was further smoothened with
the billionaire investor, Carl Icahn, exiting the takeover
Icahn had challenged the leveraged buyout of Dell and made a
counter offer to buy back 1.1 billion shares at $14.00 per share
that would give the shareholders a good return in addition to
continued earnings from a publicly-traded Dell.
So, Michael Dell's privatization proposal to take the company
away from public scrutiny and converting it into an enterprise
computing services provider has finally come to pass.
Also in the meeting, Michael Dell expressed intentions to
expand in the personal computer and tablet markets while
emphasizing on expanding the company's sales initiatives.
Dell has been bearing the brunt of the PC market slowdown and
its sales have been cannibalized by hybrid tablets from
) and Samsung. Dell has a limited presence in the tablet market.
These factors led Dell's dismal results for the past few
In the last reported quarter, Dell's earnings of 25 cents
nearly halved on a year-over-year basis while its revenues
remained flat year over year. Tepid revenues and higher costs
also impacted margins.
Despite these negatives, Dell has made its presence felt in
the cloud-based services and data center market. The latest
report from Gartner suggests that Dell's server business did
rather well in the second quarter of 2013.
Although Dell remained in the third position, behind
International Business Machines
), Dell's revenues from servers increased approximately 11.0% on
a year-over-year basis compared to significant declines at both
IBM and H-P. Moreover, its market share increased from 15.4% in
the second quarter of 2012 to 17.7% in the second quarter of
These stats are encouraging, but given that Dell has entered
the multi-billion-dollar cloud market a bit late, a lot of work
remains to be done. Gaining traction in this market will be
difficult due to stiff competition from established players such
as Salesforce and Oracle.
Currently, Dell has a Zacks Rank #3 (Hold).
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