Taking the company private is a major risk, however. It will leave Dell Inc. without publicly traded shares to entice and reward talented workers or to help buy other companies.
As part of its shift toward business software and technology services, Dell already has spent $9 billion on acquisitions in the past three years.
Leveraged buyouts also require companies to earmark some of their incoming cash to reduce the debt taken on as part of the process of going private. The obligations mean Dell will have less money to invest in innovation and expansion of its business.
The buyout will mark a new era in another technology company that began humbly and matured into a juggernaut.
With just $1,000, Michael Dell started his company as PCs Limited in his dorm room as a freshman at the University of Texas at Austin. He would go on to revolutionize the personal computer industry by providing a way for companies and consumers to order custom-made machines at a reasonable price — first on the phone, then on the Internet.
Initially valued at $85 million in its 1988, Dell went on a growth tear that turned the company into a stock market star. At the height of the dot-com boom in 2000, Dell reigned as the world's largest PC maker with a market value of more than $100 billion.
But Dell began to falter as other PC makers were able to lower their costs. At the same time, HP and other rivals forged retail relationships that gave them the advantage of being able to showcase their machines in stores where consumers could check them out before buying. By 2006, HP had supplanted Dell as the world's largest PC maker.
With its revenue slipping, Dell's market value had fallen to $19 billion before the mid-January leaks about the buyout negotiations.
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