Dell profit falls amid attempt to go private

Tue Feb 19, 2013 5:13pm EST
 

By Poornima Gupta

SAN FRANCISCO (Reuters) - Dell Inc on Tuesday reported a 31 percent drop in profit, hurt by a shrinking consumer business, as investors weighed founder Michael Dell's offer to buy out the world's No.3 maker of personal computers.

Michael Dell, teaming up with private equity firm Silver Lake and software maker Microsoft, is offering $13.65 a share to buy out the company, but at least four of its largest investors are opposed to the $24.4 billion deal.

Dell posted net income of $530 million, or 30 cents a share, in its fiscal fourth quarter on revenue of $14.3 billion. That came in slightly higher than the average analyst estimate of revenue of $14.12 billion, according to Thomson Reuters I/B/E/S.

Excluding certain items, it earned 40 cents a share, compared to an average forecast for 39 cents.

While the results matched expectations despite the tough business environment, "there isn't anything really to be super excited about," Brian Marshall, analyst with ISI Group, said, adding that declining revenue and profit doesn't bode well for the company.

"The (buyout) deal makes sense. It will go through," he said. "They will probably have to pay a little more than $13.65 to get it done but at the end of the day there aren't a lot of options out there."

Shareholders representing almost 14 percent of Dell shares not held by Michael Dell have now said they will vote against the deal. Billionaire Dell, who created the computer maker out of his college dorm room in 1984, holds a roughly 16 percent stake and needs a majority of shareholders - excluding him - to vote for the deal.

Dell gave no financial forecast for fiscal 2014 or the fiscal first quarter, citing the proposed merger agreement.   Continued...

 
A man wipes the logo of the Dell IT firm at the CeBIT exhibition centre in Hannover February 28, 2010. REUTERS/Thomas Peter