Winning bidder has a lot to do

BOTTOM LINE

FOR a company on the wane, there is certainly a lot of interest in Dell. Once one of the giants of Silicon Valley, made fashionable by its made-to-order sale process that allowed consumers to pick the screen, battery and colour of their laptops, the firm has been hit by the double-whammy of a global decline in computer sales and cheaper competition from the East.

The arrival of the iPhone in 2007 and the iPad in 2010 precipitated a boom in sales of smartphones and tablets, and consumers are now far more interested in owning the latest handset than upgrading their laptop every two years. Global PC sales fell for the first time in a decade last year, according to research from Gartner, with Dell suffering more than most. Against a 12 per cent overall decrease in fourth quarter global PC shipments, Dell fell 22 per cent as China’s rising star Lenovo gobbled up its market share.

All of which raises the question: Why are three separate parties so ready to spend tens of billions of dollars on a business that isn’t likely to buck this decline any time soon?

For Michael Dell, the answer is easy. When you have guided a company bearing your name from dorm room to global giant over nearly 30 years, it’s hard to let go, which is why the 48-year-old is likely to wrestle control in the end. Dell believes he can turn the company from its current parlous state to a leaner, more nimble software business, following in the footsteps of IBM, itself once a dominant PC maker.

Blackstone’s plans for Dell, should it eventually gain control, are much less clear, while Carl Icahn’s bid may only serve to raise the price other parties will have to bid.

Whoever does buy Dell, they certainly have a job on their hands.