Eight years ago at this time Dell had a market value of over $100 Billion and the founder Michael Dell’s stake in the PC giant was valued at over $15 billion dollars.
Move forward eight years and the company has shed more than 81% of its value and Michael Dell had become just another run of the mill Billionaire.
That was before the latest rumor hit the street that the company was going to take itself private because of the valuations that don’t seem to be in line with the profits. In the meantime Mike picked up another billion in the past couple of weeks.
The reason for the monstrous tumble is that Dell has not been able to keep up with the changing landscape. Originally the company held the big trump cards as it was able to have clients custom order computers and then wait for their delivery. As the market has changed to PC’s becoming more and more of a commodity the marketing plan has become obsolete.
Companies such as Apple and Samsung have been reaping record profits with I phones and other gadgets such as tablets, while Dell has seen its income and profits cut nearly in half.
In order to offset the decline the company has been on a buying spree of competitors in the storage and securities business, these acquisitions have totaled more than $13 billion and have not helped in raising the bottom line.
To take the company private will take a ton of capital. Estimates are as high as $30 billion and Dell would have to use much of his stake in the company as equity and the rest would have to be borrowed. It could be done, but either way it is highly unlikely that there will be any tag days for Michael Dell in the near future!
Keep those stops tight.
Todd “Bubba” Horwitz