Dell's stock soared 13 percent Monday on a report that the struggling
personal computer maker is in talks to take the company private.
unidentified people familiar with the situation, Bloomberg News said
Dell has discussed a potential sale with at least two firms that
specialize in buying companies whose stocks have fallen out of favor.
The report didn't name the interested firms.
Dell Inc., based in Round Rock, Texas, declined to comment.
effort to take the company private would probably require the backing
of Dell CEO and founder Michael Dell. He is the company's largest
shareholder with a 15.7 percent stake.
A buyout also would be
expensive, despite a 30 percent drop in Dell's share price during the
past year. Before buyout speculation drove up the stock price Monday
afternoon, Dell's market value stood at about $19 billion.
stock's surged $1.41, or 13 percent, to close at $12.28. Earlier in the
session, it touched its highest level since May, at $12.83. At one
point, the stampede to snap up shares triggered a temporary halt in
their trading on the Nasdaq market.
ISI Group analyst Brian
Marshall believes Michael Dell and the rest of the company's board might
be willing to sell at $15 or $16 per share, which would translate into
an offer of $26 billion to $28 billion. In a research note Monday Stern
Agee analyst Shaw Wu believes a buyout is unlikely because of the
financing that would be required to pull it off.
of a buyout had already been floated by Marshall and other industry
analysts who believe Dell might be better off trying to engineer a
turnaround without having to deal with pressures from Wall Street to
reverse a recent slide in revenue that has dragged down its stock.
most other PC makers, Dell has been hurt as more consumers embrace
smartphones and tablet computers for Web surfing. The shift has
curtailed demand for laptop and desktop computers, causing PC sales to
fall last year for the first time since 2001.
Dell has been trying
to adapt by reducing its dependence on PC's. The company has been
expanding into business software and technology consulting services, two
areas of technology that are more profitable than making PCs.
Hewlett-Packard Co., the only PC maker in the U.S. that's larger than Dell, is attempting a similar transformation.
Some analysts have argued that HP should be broken up so its PC and computer printer businesses operate separately.
HP rose 79 cents, or 4.9 percent, to close at $16.95 Monday.