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Dell considering strategic options including IPO

Dell has about $46 billion of debt. That includes about $3 billion of bonds maturing in 2018 and $4.35 billion due next year while the firm also has loans outstanding Dell considering strategic options including IPO
Nellie Chapman | 27 January, 2018, 00:57

The Dell board of directors will reportedly discuss strategic options at a meeting later this month, including a possible IPO. Bloomberg was the first media outlet to report Dell's review.

The portfolio of Dell Technologies includes PCs and servers, workstations, displays and gaming PCs, a cybersecurity unit and a cloud platform.

By acquiring EMC, however, Dell has accumulated $46 billion in debt, and going public could help the company raise cash and pay some of the debt off, Bloomberg News speculates.

Dell owns a majority stake of VMware (vmw) as a result of its massive $67 billion acquisition of data center tech conglomerate EMC.

Chief Executive Michael Dell, with the help of Silver Lake, took Dell private in a $25 billion deal in 2013.

The Round Rock, Tex. -based company, headed by its founder Michael Dell, is under pressure to boost its profitability after the EMC deal failed to deliver the cost savings and performance it projected, while higher component costs and a challenging data storage market have eroded its margins.

As part of Dell's takeover of EMC in 2016, shareholders received VMware tracking stock, a move meant to give investors exposure to VMware, which is growing faster than EMC. Shares of VMware, which have gained over 62% the last 12 months, hit an all-time new high Thursday.

Dell Technologies reported fourth-quarter revenue of $19.6 billion and an adjusted profit of $5.51 per share.

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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. Since then Dell has been trying to revamp its storage operations.

Another option is to buy the rest of VMware that Dell does not already own, a person familiar with the discussions said. Dell met with bankers past year to discuss that possibility and was told the company could fetch a valuation of $5 billion to $7 billion, said one of the people.