Going Private Could Cost Dell $22 Billion / 16.52 Billion Euro

The company's exit from the NASDAQ stock market would be problematic

Last week, a rumor started to travel the World Wide Web, one that said Dell was considering new options in regard to its continued existence. One of them could cost over 20 billion dollars to carry out.

Like many other PC makers, Dell didn't have the best year in 2012, as evident from the profit of barely 1.6% that the whole PC market made.

For some reason, however, this particular PC maker feels that it needs to make bigger changes than its rivals.

And by changes, we mean that Dell wants to modify both its practices and its image.

That is why it is thinking of going private. In a way, it would be a return to its roots, since Dell started off as a private firm but later joined NASDAQ.

Now, though, Dell wants out of the NASDAQ Stock Market (formerly known as the National Association of Securities Dealers Automated Quotations).

Declining sales are the main concern, even though the corporation managed to score third place in that area in 2012.

The reason Michael Dell thinks it is impossible, or unlikely, to restore Dell in a timely fashion is the way public companies work.

NASDAQ-subject corporations need to answer to shareholders, but private companies let the leader do whatever he thinks is best to transform the business and provide it with a higher level of versatility.

Dell needs to become more of a “business services” company in order to survive and thrive, according to Dell. Currently, PCs account for 70% of revenues, and with PC sales going down, a new source of revenue is needed.

Sadly, changing to a private status has some obstacles to overcome, not the least of which is the monetary cost.

By Dell's reckoning, the whole process will take around $22 billion / 16.52 billion Euro. Private equity group Silver Lakes Management and Michael Dell have found four banks so far willing to lend around $15 billion / 11.26 Euro, the rest being paid in dividends.

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