Dell Stock Jumps on Report of Possible Buyout

Dell (DELL) shares surged following a report that the personal computer maker is in talks with private-equity firms over a potential buyout.

REUTERS/Thomas PeterThe stock jumped sharply before tripping a single-stock circuit breaker, causing its shares to be halted on the NASDAQ stock exchange (NDAQ). Dell's stock has now resumed trading and was last 14 percent higher.

The PC maker, which has steadily ceded market share to larger rival Hewlett-Packard (HPQ) and China's Lenovo, is talking with at least two private equity firms, Bloomberg cited two people with knowledge of the matter as saying.

(See more: Is IBM Too Big to Grow?)

Dell declined to comment to CNBC on what it called "rumors or speculation."

Following the report, the company's shares hit an intraday high of $12.83 at 2:21 PM, up as much as 17.9 percent. That's the largest intraday move since Oct. 13, 2000, when the stock was up as much as 19 percent.

In a note last month, Goldman Sachs suggested that a leveraged buyout (LBO) of Dell would be still be a challenge. However, CEO Michael Dell's 15.7 percent stake of the total shares outstanding, valued at roughly $3.4 billion, would make completely a deal somewhat easier.

"Dell's net cash balance provides some downside buffer as it produces opportunity for an LBO or levered recap under the right conditions, though our analysis suggests an LBO would still be challenging at this point," according to the report. Jayson Noland, a senior analyst at R. W. Baird, said he thinks the deal is "more likely to not happen than happen."

(Read more: Apple Cuts Orders for iPhone 5 Parts, Reports Say)

"They talked about this back in 2010, and it is a big check to write and there are reasons to be cautious as a private equity firm," he added. "The reasons to do this are that it's easier to restructure a business behind closed doors than needing to answer to equity analysts every quarter."

Still, Noland told CNBC's "Street Signs" that he doubts the deal would happen since it is "just too big of a thing for most private equity to chase."

Like HP and Lenovo, Dell is grappling with dwindling demand for traditional desktop and laptop computers with the advent of tablets like Apple's (AAPL) iPad. Sales of PCs over the holidays slid for the first time in more than five years, according to industry researcher IDC.

The company, now reinventing itself as a provider of computers and services to corporations and government agencies, saw shipments of computers plummet 21 percent in the fourth quarter, according to IDC.

Dell's fortunes have waxed and waned in recent years. In 2007, billionaire CEO Michael Dell - whose company was lauded as an early pioneer of just-in-time inventory management and online, custom sales - returned to the company he founded to try and revive its business.

• Security Firm Discovers Cyber-Spy Campaign
  
• Small Investors May Get to Own a Bit of Facebook
  
• Smartphones Power Record Samsung Profit of $5.9 Billion During Apple Lull