Dell Inc to go private in $24.4 billion deal, Michael, Silver Lake pay $13.65 per share, Microsoft $2 bn

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Michael Dell and Silver Lake are paying $13.65 per share in cash for world's No. 3 computer maker. (AP) Michael Dell and Silver Lake are paying $13.65 per share in cash for world's No. 3 computer maker. (AP)
SummaryMichael Dell and Silver Lake are paying $13.65 per share in cash for world's No. 3 computer maker.

of smartphones and tablet computers.

The buyout marks a new era for a company created in 1984 by a college kid with a $1,000 investment. The company, initially called "PCs Limited,'' would go on to revolutionize the PC industry by taking orders for custom-made machines at a reasonable price - first on the phone, then on the Internet.

Initially valued at $85 million in its 1988 initial public offering of stock, 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 was 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 relationships with stores that gave them the advantage of being able to showcase their machines. 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 recent leaks about the buyout negotiations.

Unlike its rival, HP apparently doesn't have any interest in going private. In a statement Tuesday, HP said it intends to court Dell customers who are worried about the company's ability to innovate, expand its product line and pay its bills now that it will have to earmark some of cash flow to reduce the debt taken on to go private.

"Dell has a very tough road ahead,'' HP said, adding that "leveraged buyouts tend to leave existing customers and innovation at the curb.''

Going private also poses other risks. For instance, it will leave Dell without publicly traded shares to entice and reward talented workers or to help buy other companies.

Microsoft also is going out on a limb with Dell.

By becoming a major Dell backer, Microsoft could gain more influence in the design of the devices running on a radically redesigned version of Windows that was released in late October. The closer ties with Dell, though, could poison Microsoft's relationship with HP, the largest PC maker, and other manufacturers that buy Windows and other

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