Dell profit plummets 31% as business shrinks and investors ponder $30b buyout
SAN FRANCISCO (REUTERS) - Dell on Tuesday reported a 31 per cent 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.
Mr Dell, teaming up with private equity firm Silver Lake and software maker Microsoft, is offering to US$24.4 billion (S$30.2 billion) buy out the company, but at least four of its largest investors are opposed to the deal. He 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 per cent, 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 per cent, driven by its data centre business and revenue from recently acquired companies such as Quest Software and Sonic Wall. Overall, however, revenue slid 11 per cent.