Dell Looking Into Acquisitions, Sale or IPO

U.S. based computer maker Dell Technologies is exploring several options that could see the largest privately held tech company in the world grow even further via acquisitions or going public, said people who are familiar with this situation.

The board of directors at Dell is meeting later in January to consider the largest shakeup in the history of the company since acquiring EMC Corp the provider of data storage in 2016 for $67 billion, said sources.

The company is headed by Michael Dell, its founder, and has come under pressure to increase its profitability following the failure of the EMC deal to deliver costs savings as well as performance that was projected, while higher costs of components and a challenging market for data storage has eaten into margins.

Dell is looking over several targets for possible acquisition that would increase cash flow and broaden its offerings, said a source close to the situation.

The review process by Dell is in its early stages and there is no deal close to being certain.

Dell is also taking into consideration an initial public offering or sale of Pivotal Software Inc., a fast growing division said sources. It might also look into a transaction with VMware Inc. its majority owned maker of virtualization software. Shares of VMware, which have gained over 62% the last 12 months, hit an all-time new high Thursday.

Dell, whose portfolio of technology includes displays, servers, gaming PCs and workstations, also has RSA a security unit and Boomi a cloud platform.

Dell has struggled due to fierce competition for the storage market, as rivals in cloud base like Azure from Microsoft and AWS from Amazon put pressure on overall prices.

The infrastructure chief of Dell, former executive at EMC David Goulden, left last fall, and the company has worked since to reorganize storage operations.

The market of PCs, which Dell helped to shape when founding the company in 1984 as a pre-med freshman with a savings of $1,000, has been stagnant due to the popularity of smartphones and tablets, and shrank in 2017 by 0.2%.

A strong spot in the business of Dell has been servers, helping its net revenue to increase to more than $56.7 billion over the nine month period through November 3 from just $41.6 billion for the same period one year earlier.

However, the operating expenses of the company soared to $17.3 billion from $10 billion leading to a $3 billion operating loss, up from it year ago operating loss of $1.6 billion.