Will the Dell go private?

It was all over the Internet and news media that the computer maker Dell is considering leverage buy out (LBO).  The founder and the current CEO, Michael Dell who own more than 15.7 percent of publicly traded shares and Silver Lake Partners, a private-equity outfit is considering a buyout of the company.

PC sales have been declining steadily in the recent past.  According to some published reports, global PC sales shrank by about 6.4 percent during the fourth quarter of 2012 compared to the same period of 2011, first time in five years that holiday sales were down.  What’s remarkable of the slowing sales is this came in during the release of Windows 8 new operating system.  The slowdown put pressure on Dell stocks and the stock price went lower.  Dell lost its number one position in PC sales to others as well as other products such as smartphones.  Still the cash-rich Dell earns about $3 billion a year.  A LBO is expected to value the company at $25 billion.  If the LBO deals fallout, current shareholders may benefit similar to what happened after LBO fallout of Seagate Technology.  Some latest news reports indicates that Microsoft is considering a significant investment in Dell which may damp the LBO prospect.