Tuesday we got the official news that everyone has been expecting, PC-maker Dell (DELL) is going private.
In a $24.4 billion deal, the company's founder Michael Dell, and investment firm Silver Lake will take the company private. The deal is the biggest leveraged buyout since the financial crisis.
Microsoft (MSFT) is also participating int he deal, ponying up a $2 billion loan to help aid Dell in its move to reinvent itself as a private entity.
Dell has been in decline for a number of years as the entire PC business has been shrinking. In today's mobile world, people are just not buying as many PCs as they once did, and Dell has been strugged to transition into the mobile market.
Dell still has a huge market, there is no question about that, but it is strong in a dying market, and unless it is able to completely reshape its business, it is only a matter of time before it fades away into a memory.
Mr. Dell has been pushing to take the company private since his first discussions on the matter with the company's board of directors last August, and now he definitely has his work cut out for him.
Dell's vision is to move the company away from its reliance on the PC business, and to transform it into an integrated and diversified global IT solutions provider.
The main advantage to going private is that the company will be able to operate without the scrutiny of Wall Street. For Dell to reinvent itself, it is going to have to make long term decisions, which will likely take years to pay off. Wall Street does not like waiting, and now Dell will be able to pursue longer term goals as opposed to being forced to appease analysts on a three-month cycle.
The fact that Microsoft is part of the deal is interesting though. Microsoft relies heavily on Dell to sell PCs with its Windows operating system, so while it make sense for Microsoft to want to come to the company's aid, its future influence on Dell could come back to haunt Dell as it tries to distance itself from the eroding PC market.
One of the exciting future prospects that the company has is its thumbstick computer, code named Project Ophelia. Dell unveiled the new device last month at the annual CES show, and it was rather well received.
The device, which will become available in June, runs Google's Android operating system, and can connect to televisions and PC monitors via USB. Dell's ability to bring the “anti-PC” device to market is a result of the company's acquisition of Wyse Technologies which originally produced the technology.
The move is a clear sign that Dell realizes the future of the PC market is weak, to say the least. You can argue that it should have come to this realization years ago, but it is encouraging to see that it is now moving in the right direction.
Michael Fowlkes is a financial writer who has been with the Fresh Brewed Media family since 2004. Over the course of his tenure with Fresh Brewed Media, he has worn many hats, including portfolio manager, options analyst, and writer. Michael received his undergraduate degree from Virginia Tech in Accounting and got his start in finance working as a stock trader for six years at Chase Investment Counsel in Charlottesville, Va. His articles typically cover big-picture events and forecasting what impact they will have on the stock market. In addition to writing for Fresh Brewed Media, Michael also wrote for AOL's BloggingStocks for three years, focusing most of his attention on the energy and technology sectors. Follow him on Twitter at @MFatMICenter.