HP Will Prey on Disgruntled Customers in Wake of Dell Buyout

On Tuesday after Dell announced that it would be acquired by CEO Michael Dell and global technology investment firm Silver Lake, HP released a short statement saying that the rival PC maker has a very tough road ahead, especially when it comes to retaining customers.

HP would seemingly know all about the "tough road" given all the uncertainty surrounding the company in 2011 after it discontinued selling webOS products and revealed plans to possibly spin off its Personal Systems Group. But HP Meg Whitman said that "a separation would not create incremental shareholder return or customer value". Thus the company went through an "organizational realignment" to improve performance and drive profitable growth across the entire HP portfolio.

Now the struggling PC maker is taking shots at another struggling PC maker that's gone private in a $24.4 billion leveraged buyout deal so that it can restructure and shift its focus to the enterprise sector. Dell may even be able to find its mobile footing so that it can better compete in a growing smartphone and tablet market.

"The company faces an extended period of uncertainty and transition that will not be good for its customers," HP stated. "And with a significant debt load, Dell's ability to invest in new products and services will be extremely limited. Leveraged buyouts tend to leave existing customers and innovation at the curb. We believe Dell's customers will now be eager to explore alternatives, and HP plans to take full advantage of that opportunity."

Ouch. Dell founder and CEO Michael Dell, who invested his own funds and shares into the buyout, sees the change a little differently.

"I believe this transaction will open an exciting new chapter for Dell, our customers and team members," he said. "We can deliver immediate value to stockholders, while we continue the execution of our long-term strategy and focus on delivering best-in-class solutions to our customers as a private enterprise. Dell has made solid progress executing this strategy over the past four years, but we recognize that it will still take more time, investment and patience, and I believe our efforts will be better supported by partnering with Silver Lake in our shared vision."

On Tuesday Dell announced that stockholders will receive $13.65 in cash for each share of Dell common stock they hold, in a transaction valued at approximately $24.4 billion. The buyers will acquire for cash all of the outstanding shares of Dell not held by Michael Dell and "certain other members of management".


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26 comments
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  • iknowhowtofixit
    I work closely with HP's distribution chain. They have no room to talk.
    15
  • Anonymous
    Why would DELL customers be disgruntled?
    13
  • Other Comments
  • iknowhowtofixit
    I work closely with HP's distribution chain. They have no room to talk.
    15
  • susyque747
    Nice to see Dell go back to private, bad to see Mr. Dell take money from Satan, aka Microsoft.
    -13
  • Anonymous
    Why would DELL customers be disgruntled?
    13