JAX London 2014: A retrospective
Nuts to Wall Street

Dell free to go back to startup roots

LucyCarey
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Michael Dell has won the right to buy back his company, giving the struggling firm the freedom to go back to its entrepreneurial roots.

Dell company officials were celebrating this week after getting the nod  on to take the business he started in his college dorm room private again in a $24.9 billion deal, expected to shift software to the centre of the firm’s strategy.

Thanks to the rise of Chinese competitors and the unstoppable rise of tablet and smartphone, Dell has struggled to retain a grip on the market in recent year. Founder and CEO Michael Dell, who gave his name to the business, said in an open letter that he hopes that the move, made possible with a little fiscal help from Silver Lake Partners, Microsoft, and a few financial institutions, will allow the firm to recapture the “entrepreneurial spirit” of its early years.

Outlining his vision for the future, Michael made comparisons to how the innovations of cloud, big data, mobile and security are, “changing people’s relationship with technology, just as the PC did almost 30 years ago.” He wrote,“it’s time to do what Dell does best make these innovations simpler, more affordable and more accessible, putting more power into the hands of more people than ever before.”

In the new deal, approved by shareholders on Thursday September 12, Michael will hold a 75 percent stake in the private company. Following the announcement, in a conference call, he commented that by going private, he believes the company can be more effective in pushing high-margin products and services without Wall Street breathing down its neck. Ultimately, if Dell is to have a hope of regaining its former glory, a massive realignment to become a more full-featured, enterprise oriented company is vital –  and that’s something that would have been impossible with public stockholders clamouring for bigger profits all the time.  

Developers will benefit from increased development, as will Dell’s R&D and acquisitions departments. Michael also said that the company will expand its sales force, staff and partner programs, as well as grow its presence in emerging markets.

Chief Financial Officer Brian Gladden reiterated the need to concentrate on new growing sectors, but noted that the firm won’t be disregarding their PC roots, saying, “What we’ve seen is that part of the market is growing faster. By no means is that a statement of our lack of commitment to the PC business.”

 

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