A titan of Texas business appeared to have stumbled five years ago – perhaps for good. It was a long drop for Michael Dell, who founded a computer company in his dorm room at UT, built it into the fastest-growing company in history, and turned 2,700 of his employees into millionaires along the way. By 2013, Dell Computer was getting stomped on by lower-priced Asian competitors. And Michael Dell pulled his company out of the stock market, taking it private. But that isn’t the end of the story. This week, Dell said the company will go public for a second time – the question is whether this will continue the sort of renaissance Dell’s been working toward privately for the past five years.
Sebastian Herrera, a business and technology reporter for the Austin American-Statesman, says the Dell stock deal is unusual because the company was able to convert private stock into publicly-traded stock.
“These shareholders that have owned these privately-held shares have two options,” he says, “They can either be bought out at $109 per share or they can have the other option of basically making the shares that they own right now that are private shares into the public shares that are gonna be worth a little bit more.”
A five-year hiatus from the public markets gave Dell some freedom to be run without having to answer to the demands of investors seeking immediate returns.
“When a company is public they have to answer to shareholders, and so when they became private they were able to basically run their operations how they wanted to without having to answer to shareholders,” Herrera says.
Industry analysts would say Dell is a stronger company now than it was five years ago. Herrera says the company has become more diverse in terms of the products and services it offers.
“Instead of just selling and making PC’s, they’re doing things like cloud computing,” he says, “The world has gotten bigger and they’re delving into newer technologies.”
When his company returns to the public market, Michael Dell will still own the vast majority of the company.
“That puts him in a position to where he still has control over his company, but they’re gonna be able to raise some money as well,” Herrera says.
Written by Amber Chavez.