Could Dell Really Go Private? (DELL, HPQ, AAPL)

Dell Inc. (NASDAQ: DELL) is a lost company by the count of many investors.  Gone are the hay-day gains of the company with new PC’s selling like hotcakes as everyone in America started to get on the Internet for the first time at home.  Hewlett-Packard Co. (NYSE: HPQ) has taken and taken over the last few years, and now Apple Inc. (NASDAQ: AAPL) has moved from a novelty computer company with awesome peripherals into a real challenge to the PC sector as a whole.  And now a report from Reuters last night lends more thought that CEO and founder Michael Dell had once considered taking the company private.

You can see the Reuters report here, but there is much more to this story.  Michael Dell had a chance when the private equity money was sloshing around like drunken sailors to take Dell private.  The biggest notion is that technology companies the size of Dell are supposed to be public so that they can access the capital markets more efficiently and to be able to better offer incentives to employees.

The other issue is that the structural problems would not have been fixed by a going-private transaction.  In fact, all that would have come about is that the company could have been allowed to go far less public about unit sales, PC sales, and other issues that investors and consumers would be interested in.  Taking the company private would also not have changed the notion that PCs are mere utility devices now no different than toasters and refrigerators.

Michael Dell has admitted that the company’s transformation is incomplete.  The company also appears to be considering smaller acquisition opportunities that would beef up the I.T. side of the business and Dell himself is committed to running the company.

Dell shares moved up late yesterday on the news out of a Sanford Bernstein conference, but shares are down 1.5% at $13.55 right before the critical employment data.  Dell’s market cap is for all practical purposes $27 billion.  Finding $27 billion lying around, before any premium to holders, would not be easy today and would have unlikely been easy back in the private equity peak.

JON C. OGG