Breakout

Dell Goes Private: Thanks For Nothing, Says Ritholtz

Breakout

After three weeks of speculation and years of declines, Dell Inc. (DELL) is going private. Of course, the $24.4 billion all cash offer being led by the company's namesake and founder still needs the approval of shareholders, but Michael Dell is being backed by some serious heavy weights, including Microsoft (MSFT) and Silver Lake Partners --the private equity firm best known for tripling its investment in Skype in less than two years.

At its height, Dell's direct shipping personal computer business dominated the industry so much that it could dictate terms to suppliers and even mock smaller rivals, such as Apple (AAPL). That success dwindled as the move to mobile devices and consumer dissatisfaction began to erode sales and market share.

"I bought my last Dell a few years ago and swore the company off," says Barry Ritholtz, the CEO of Fusion IQ, in the attached video, adding he "literally had to download something called the Dell De-crapifier" just to get the junk off it. As he sees it, the real winner in this offer is Michael Dell himself, an assertion he says should really come as no surprise.

"Keep in mind that Michael Dell extracted $17 billion in cash over the years from the company," Ritholtz says, adding that it's also a stock that is now about one-quarter the size it once was. Whether a competing offer emerges or this existing bid is rejected, as it stands now anyone who has owned the stock for more than eight months is a loser.

Since retaking control of his company six years ago, Michael Dell has had little luck at stemming market share losses and a slumping share price, all at a time when the sector he once dominated was undergoing a renaissance of its own led by the rise of Apple and its ubiquitous line of iProducts. In fact, while some investors will surely bicker over the price, no one seems to be criticizing the concept to take the company private and overhaul it there without the prying eyes and demand of Wall Street.

If it works and the new and improved Dell can reemerge a year or two from now as a strong competitor, then Michael Dell will have solidified his legacy amidst the scions of tech. If it fails, Dell's spot on the Forbes 400 list is sure to take a hit from its current rank of #22 and $14.6 billion.

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