Dell struggles to go private with diminished profits
Tuesday seems to be the wrong day for taking Dell Inc profits into account. Now Dell has lost 31% from its profits. This loss was caused by rejecting the offer proposed by Michael Dell, the founder, who intended to purchase the 3rd best computer manufacturer.
Although the purchase price was offered at $24.4 billion, the major creditors of Dell had refused the offers. The attempt was made by Michael Dell, who joined financial forces with the giant Microsoft and a private company called Silver Lake. The final price they thought of would’ve meant a price of $13.65 per share.
The decision of the creditors can be understood, since the fourth quarter of 2012 earned the company huge revenues, valued at $14.3 billion. Speaking in shares, the profits in just one quarter were 30 cents per share. However, most of the items brought 40 cents instead of 30, per share.
An ISI Group analyst, Brian Marshall believed that Dell should be concerned thanks to the profit loss and revenue loss they are facing. He also admitted that an amount of $13.65 per share wouldn’t be enough, but a slightly more generous offer would make a deal eventually.
Partners of Michael Dell, who own shares of almost 14%, don’t want to accept his offer. For Dell to be able to make a deal, his partners should vote for it. Dell now owns 16% of the shares.
Dell Inc shares were finally valued at $13.805 on Nasdaq.
Dell PC sales
Since Michael Dell was the proposer of the purchase, he won’t be participating at the events on Tuesday, when release results will be known. In comparison with 2012, Dell has declined by 40%, which is a huge loss. The reforming and re-strengthening of the company is planned to be obtained from providing services of a much higher value. The PC marketplace is not as easy as it was years before, Dell is now facing huge competition against breakthrough-companies such as Lenovo.
Although the holidays were expected to bring profits with their personal computers and although Microsoft Windows 8 finally came out, the sales were less in comparison with previous years’ sales. The worldwide sales dropped by at least 21%, which is not quite a good progress for a great company such as Dell Inc.
The only positive aspect for Dell lately was that it managed to earn more on enterprise solution, which raised 6%. Even if this rise helped Dell, the fiscal year still resulted worse than it resulted before.