Dell to diversify away from computers

Dell, which intends to go private in a $24.4bn (€17.9bn) deal led by founder and CEO Michael Dell, plans to stick to its current turnaround strategy to diversify away from personal computers.

Dell to diversify away from computers

Brian Gladden, chief financial officer, told Reuters the company can now pursue its strategy without being limited by the pressures of public ownership.

“Under a new private company structure, we will have time and flexibility to really pursue and realise the end-to-end solutions strategy,” said Mr Gladden.

“We will be able to pursue organic and inorganic investment and we won’t have the scrutiny and limitations associated with operating as a public company.”

“So we are generally very, very encouraged by the future here.”

The company is struggling to defend its market share against Asian rivals including Lenovo Group. It is trying to bolster growth by focusing on products and services to corporations.

Dell has also over the past couple of years given up low-margin sales to consumers and is moving into higher-margin areas, such as businesses in the public sector and the healthcare industry.

However, the turnaround has been slow and painful. In November, Dell saw its fiscal Q3 profit slide 47%, hurt by lower PC sales, weaker demand from large corporations, and the shift to mobile computing.

Mr Gladden acknowledged that the turnaround will take more time and investment, which the company plans to make as a private enterprise that will have less emphasis on quarter-to-quarter progress.

“Without having really the scrutiny that is associated with a publicly traded stock, we can make the necessary investment and stick to plan, in some cases be more aggressive than we can today,” he said.

Rival PC makers were quick to dismiss Dell’s intentions as disruptive.

“Dell has a very tough road ahead,” top PC maker Hewlett Packard said in a statement. “And with a significant debt load, Dell’s ability to invest in new products and services will be extremely limited.”

HP said leveraged buyouts tend to leave existing “customers and innovation at the curb” and HP plans to take full advantage of any disruption the move will cause among Dell’s customer base.

Asian rival Lenovo said in a statement it was focused on products and customers “rather than distracting financial manoeuvres, and major strategic shifts”.

Dell’s founder and CEO, and private equity firm Silver Lake are paying $13.65 per share in cash for the buyout.

When asked if Dell plans to exit the PC business, Mr Gladden said the board completed a review, and “this is where they ended up”.

— Reuters

More in this section

Price info
IE_180_logo
Price info

Subscribe to unlock unlimited digital access.
Cancel anytime.

Terms and conditions apply

The Business Hub
Newsletter

News and analysis on business, money and jobs from Munster and beyond by our expert team of business writers.

Sign up
Puzzles logo
IE-logo

Puzzles hub

Visit our brain gym where you will find simple and cryptic crosswords, sudoku puzzles and much more. Updated at midnight every day. PS ... We would love to hear your feedback on the section right HERE.

Lunchtime
News Wrap

A lunchtime summary of content highlights on the Irish Examiner website. Delivered at 1pm each day.

Sign up
Revoiced
Newsletter

Our Covid-free newsletter brings together some of the best bits from irishexaminer.com, as chosen by our editor, direct to your inbox every Monday.

Sign up