Thursday 18 July 2013

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The release of desktop wallpaper a negative impact on Dell and other major PC vendors, as consumers switched away from desktop and laptop PCs. Dell's own mobility division has not managed success with developing smartphones or tablets, whether running Windows or Google Android.[42][43] The Dell Streak was a failure commercially and critically due to its outdated OS, numerous bugs, and low resolution screen. InfoWorld suggested that Dell and other OEMs saw tablets as a short-term, low-investment opportunity running Google Android, an approach that neglected user interface and failed to gain long term market traction with consumers.[44][45] Dell has responded by pushing higher-end PCs, such as the XPS line of notebooks, which do not compete with the Apple iPad and Kindle Fire tablets.[46] The growing popularity of smartphones and tablet computers instead of PCs drove Dell's consumer segment to an operating loss in Q3 2012. In December 2012, Dell suffered its first decline in holiday sales in five years, despite the introduction of Windows In the shrinking PC industry, Dell continued to lose market share, as it dropped below Lenovo in 2011 to fall to number three in the world. Dell and fellow American contemporary Hewlett Packard came under pressure from Asian PC manufacturers Lenovo, Asus, and Acer, all of which had lower production costs and willing to accept lower profit margins. In addition, while the Asian PC vendors had been improving their quality and design, for instance Lenovo's ThinkPad series was winning corporate customers away from Dell's laptops, Dell's customer service and reputation had been slipping.[48][49] However Dell remained the most profitable PC vendor, after Apple.Dell has been attempting to offset its declining PC business, which still accounted for half of its revenue and generates steady cash flow,[51] by expanding into the enterprise market with servers, networking, software, and services.[52] It avoided many of the acquisition writedowns and management turnover that plagued its chief rival Hewlett Packard.[43] Dell also managed some success in taking advantage of its high-touch direct sales heritage to establish close relationships and design solutions for clients. However, the company was unable to convince the market that it could thrive or made the transformation in the post-PC world, as it suffered continued declines in revenue and share price.[53][54][55][56]After several weeks of rumors, which started around January 11, 2013, Dell announced on February 5, 2013 that it had struck a $24.4 billion leveraged buyout deal, that would have delisted its shares from the NASDAQ and Hong Kong Stock Exchange and taken it private.[57][58][59][60] Michael Dell and Silver Lake Partners, aided by a $2 billion loan from Microsoft, will buy the public shares at $13.65 a piece.[59] The $24.4 billion buyout is the largest leveraged buyout backed by private equity since the 2007 financial crisis.[61] It is also the largest technology buyout ever, surpassing the 2006 buyout of Freescale Semiconductor for $17.5 billion.Dell founder Michael Dell said of the buyout "I believe this transaction will open an exciting new chapter for Dell, our customers and team members".[62] Dell rival Lenovo reacted to the buyout, saying "the financial actions of some of our traditional competitors will not substantially change our outlook".[62] Meanwhile, HP stated that Dell's traditional product innovation might suffer as a result of the buyout.The buyout price represents a small premium over the current stock price, and much lower than the stock's all-time high of $65 USD per share reached during the dotcom bubble in 2000, as well as its July 2005 price of $40 USD which was the high-water mark of the post-dotcom era. Several major institutional shareholders have voiced opposition, including Southeastern Asset Management and Mason Hawkins.[64] Michael Dell owns the largest single share of the company's stock and was part of negotiations to go private,[65] however he is offering only $750 million of his own money for a deal that will involve almost $16 billion in new debt.[66] T. Rowe Price, which has the third largest holding, also objected to the low price of the proposal.[67] Southeastern Asset Management, the largest shareholder of Dell stock with about 8.5%, is opposed to the deal at the per share price of $13.50 to $13.75 as they value the company at $23.72 a share.[68] Southeastern also complained that the overseas funds aren't offered to sweeten the buyout offer.[Typical leveraged buyouts have been viewed as tools of “vulture capitalists” in breaking up firms and layoffs, or ways to bring greater efficiency and new management to troubled enterprises. However the Dell leveraged buyout is unusual as the driving force behind the deal, Michael Dell, was already the Chairman and CEO, founder, and largest shareholder in the firm. Unlike most leveraged buyouts that aim to wrest management control away from incumbents, the Dell deal intends to keep the same leadership team in place. The main aim of Dell's leveraged buyout is to rejigger the company’s financial structure,.By going private, Dell would be able to radically restructure its legacy PC business and build up its enterprise solutions and cloud computing, without worrying about the impact on its quarterly results and its stock price

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