By John Shinal
SAN FRANCISCO (MarketWatch) ? If Michael Dell indeed has surrendered to the new reality of a post-PC world, tech investors may soon benefit from a wave of big-cap restructurings that unlock shareholder value.
Now that a report of private-equity buyout talks for Dell /quotes/zigman/27952/quotes/nls/dell DELL +12.96% has surfaced, though, shareholders of rival Hewlett-Packard Co. may be the biggest beneficiaries of such a trend ? but only if H-P Chief Executive Meg Whitman follows Dell?s lead.
Dell shares jump on buyout chatter
PC maker?s stock soars on a report that the company is in takeover talks with private-equity firms. (Photo: Getty Images)
That?s because H-P /quotes/zigman/229301/quotes/nls/hpq HPQ +4.89% ?is now better positioned than Dell in the personal-computer market, which still throws off gobs of cash even as it?s shrinking.
Just as important, H-P?s investments in software over the past few years (albeit overpriced and bungled) mean there is more hidden value inside the Silicon Valley giant than there is in its chief rival. To put it more bluntly: H-P will benefit more from a needed restructuring than Dell, if only because the former will have more cash to pay for it all.
So the question is whether H-P?s board and executive team will have the courage to do what?s right, by voting to break up the company, even though it will put them out of their current jobs.
Timing of M&A talks no mystery
I?m guessing it?s no coincidence that word of a possible Dell takeover came the same day a report from market-research firm Gartner Inc. showed fourth-quarter global PC shipments by all vendors fell almost 5%, from a year earlier. Read the Gartner report: Declining worldwide PC shipments signal structural shift.
This same report showed that Dell just had an especially horrible quarter, with shipments falling a disastrous 21% and its global market share shrinking to 10.2%, from 12.2% a year earlier.
As I wrote in an August column, Michael Dell was not the right person to try to revive his namesake company. See: When founders are the wrong CEO pick.
While Dell was smart enough not to overpay for software or networking technologies ? as H-P did when it bought Autonomy and 3Par ? he fared no better in managing the transition to a tablet-based computing market.
That?s why Dell shares had fallen more than 50% from the time of its founder?s return in 2007 to the date of that column, and why they kept falling to within 5% of a 10-year low in November.
Only then did the Round Rock, Texas-based company?s market capitalization drop to a level low enough to attract the potential interest of private-equity firms.
Dell shares have risen 20% since then, even before news of a possible buyout caused their Monday surge.
/quotes/zigman/27952/quotes/nls/dell DELL 12.29, +1.41, +12.96%/quotes/zigman/229301/quotes/nls/hpq HPQ 16.95, +0.79, +4.89%
/quotes/zigman/27952/quotes/nls/dell
US : U.S.: Nasdaq
Volume: 114.41M
Jan. 14, 2013 4:00p
Rev. per Employee$535,603
/quotes/zigman/229301/quotes/nls/hpq US : U.S.: NYSE
Volume: 61.98M
Jan. 14, 2013 4:00p
Rev. per Employee$361,465
Source: http://www.marketwatch.com/story/michael-dell-and-post-pc-tech-investing-2013-01-14
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