Dell profit plummets 31 percent as investors ponder $24 billion buyout

Tue Feb 19, 2013 7:00pm 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.

The founder and CEO did not join in management discussion of the results in a conference call with analysts, given his participation in the buyout. Dell executives also did not comment on the buyout.

Analysts said Dell's rapidly shrinking business and murky prospects in a declining PC market may make the buyout a more attractive option for investors tired of waiting for a turnaround.

Since news of the proposed buyout emerged in January, the stock has gained almost 30 percent - a rally that analysts say may evaporate should the deal fall through.

On Tuesday, the company said sales across every business line, except servers and networking, declined in the fiscal fourth quarter. Revenue from servers and networking climbed 18 percent, driven by its datacenter business and revenue from recently acquired companies such as Quest Software and Sonic Wall.

Overall, however, revenue slid 11 percent.

"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.   Continued...

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