Linked by Thom Holwerda on Tue 15th Jan 2013 01:24 UTC
Hardware, Embedded Systems "Dell, the personal-computer maker that lost almost a third of its value last year, is in buyout talks with private-equity firms, two people with knowledge of the matter said. The shares surged." So yeah, like I said - no wonder Microsoft has entered the hardware business. The PC OEM era is over.
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RE: I don't get this
by boblowski on Tue 15th Jan 2013 10:06 UTC in reply to "I don't get this"
boblowski
Member since:
2007-07-23

I'm not an economist, but the idea seems to be that a company like Dell is an interesting target for private-equity firms, just because it offers a solid base (stable sales and stock valuation) in a declining market (which enhances the vulnerability of competing companies in this market). With enough fresh higher-risk capital it can be turned into (or even broken up into) one or more smaller parts that each can pursue a more aggressive expansion strategy with a higher valuation.

For a less mature company or in a stable or growing market the risks of such a disruptive strategy might not way up to the potential return on investment.

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