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Dell CEO Considered Taking PC Maker Private

(Reuters) – Dell Inc’s (NASDAQ:DELL) chief executive said on Thursday he has considered taking the company he founded private, but said the transformation of the personal computer maker is still incomplete. In response to a question at the Sanford C. Bernstein investor conference, Michael Dell said he considered taking Dell private but declined to comment […]

Written By: Channel Insider Staff

Jun 3, 2010

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(Reuters) – Dell Inc’s (NASDAQ:DELL) chief executive said on Thursday he has considered taking the company he founded private, but said the transformation of the personal computer maker is still incomplete.

In response to a question at the Sanford C. Bernstein investor conference, Michael Dell said he considered taking Dell private but declined to comment when asked what would make him think about the possibility more seriously.

A Dell spokesman also declined to comment further.

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According to data compiled by Thomson Reuters, Dell is the largest single shareholder in his namesake company, with an 11.6 percent stake.

Michael Dell famously founded the company in 1984 while a student at the University of Texas. Dell, which went public in 1988, pioneered a unique business model by selling PCs directly to customers.

After a period of huge growth that culminated in the company’s claiming the title of world’s biggest PC maker, Dell has struggled over the past few years. It has fallen to No. 3 in the global rankings on a unit basis and lost market share to Hewlett-Packard Co (HPQ.N) and Acer Inc. (2353.TW)

Dell stepped down as CEO in 2004 but returned to the post in 2007.

The company has been shedding jobs and cutting costs as it focuses on profitability over growth. Dell has been moving to diversify its business away from its core of low-margin PCs and into businesses such as IT services.

PCs still account for roughly half of the company’s revenue.

At his remarks at the investor conference, Michael Dell said the company’s transformation is taking a bit longer than expected and is not yet complete. But he said the IT vendor is seeing encouraging signs in the shift of the mix of its businesses.

"I think this is a company that can grow its operating income in dollars pretty substantially and that’s our intent," Dell said.

"If people look at the progress around services … and the server business, there’s a whole lot there to like," he said.

Last month, Dell reported quarterly sales and profit that beat expectations, but its gross margin fell short of analysts’ forecasts.

Dell made its largest ever acquisition last year, buying technology services provider Perot Systems for $3.9 billion.

When asked about the company’s M&A plans, Dell said there is "not necessarily" a high probability that the company would make an acquisition of more than $2 billion, and said the company has focused on smaller deals.

Shares of Round Rock, Texas-based Dell rose 4.9 percent to close at $13.76 on the Nasdaq.

(Reporting by Gabriel Madway; Editing by Steve Orlofsky)

Dell CEO Considered Taking PC Maker Private

Channel Insider Staff

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