Dell stock does not exist today, but the company may soon make its way back into the stock market. Dell's founder, Michael Dell, took the company private in 2013, but before that time, Dell was a publicly traded company under the symbol DELL. The company had its initial public offering (IPO) in 1988 and was publicly traded until the privatization deal was approved in 2013. The agreement to take the company private was valued at around $24.9 billion. Michael Dell partnered with Silver Lake Partners, a prominent private equity firm, to take the company private to allow it to focus more on its long-term strategy without having to be pressured by the short term growth, profitability, and equity analysts' focus on quarterly earnings. This deal was the largest corporate privatization in history at the time.
In January 2018, CNBC reported that Dell was considering a reverse-merger to VMware Inc. (VMW), a publicly traded cloud-computing company that Dell bought as a part of its $67 billion acquisition of EMC in 2015. If Dell were to sell itself to the smaller company it already owns, it would be able to get back onto the market without a listing. Dell may also undertake the traditional IPO route, but either way, it seems that the tech giant may remain private for much longer.
History of Dell
Michael Dell began the company in 1984 as PC’s Limited when he was a student at the University of Texas. He started by operating the company from his dormitory room. The business focused on building IBM-compatible computers with readily available stock parts. Dell advertised the computers directly to consumers in national computer magazines. Customers could pick options to have their computer custom assembled.
The company began operating under the name of Dell Computer Corporation in 1987 and started a push for international expansion. Its first international location was in Britain.
Dell had its IPO in June 1988, raising $30 million. Its market capitalization grew from an initial $1,000 to $85 million. Dell was featured in the Fortune 500 list for the first time in 1992. Michael Dell was the youngest CEO ever of a Fortune 500 company.
In 2004, Michael Dell stepped down as CEO but maintained his position as chair of the board. After some hiccups at the company in 2005, Dell stepped back into his former role as CEO in 2007.
Reasons for Going Private
Dell laid out its argument for going private in a 2013 SEC filing. The company stated it was fighting for market share in a sector that was seeing lower sales of personal computers due to increased demand for smartphones and tablets. The company had missed its own revenue projections for the prior seven quarters. Projections for 2013 revenue decreased from $66 billion to a more dreary $55 billion.
Michael Dell stated that getting the company back on track would require substantial changes in its business model and the introduction of new products and services. He believed these requirements would lead to substantial volatility in the stock price and lowered future earnings.
In a 2014 opinion piece in the Wall Street Journal, Michael Dell cited myopic financial markets and activist investors too focused on short-term results as the main drivers for taking the company private. By going private, the company can focus on a long-term strategy to position it for success in the future. It can align its interests with those of its customers. Dell said the company was prospering after going public since its team could focus on innovating for customers rather than worrying about quarterly results.
Dell continued its pattern of privatization by announcing a joint deal with Silver Lake Partners to take EMC private for a cash and stock deal valued at $67 billion. EMC is an information technology company focused on traditional and cloud-based storage centers. The deal also allowed Dell to gain close to 80% interest in VMware that continued to trade as a public company. Its net income in 2016 was $1.2 billion.