Economy

Dell Technologies to consider IPO

Dell Technologies to consider IPO

By going public, the company could raise funds to pay off this debt - or at least some of it. Bloomberg estimates that the company now has $46 billion in debt, including $3 billion of bonds coming up for repayment in 2018 and $4.35 billion next year.

Michael Dell joined forces with private equity firm Silver Lake Management in 2013 to take the business private in a $24.9 billion deal. Its board is meeting later this month and will discuss its options. Round Rock, Texas-based Dell may also decide not to make any such moves at this time, said the people who asked not to be identified because the talks are private. This allowed the firm to cut costs and take risks that it would not have been able to do as a public company.

Raising cash could help the company further expand or pay off some of the debt.

Another option is to buy the rest of VMware that Dell does not already own, one person familiar with the matter said. According to reports, Dell Technologies is around $50 billion in debt, out of which $3 billion have to be paid this year, and $4.35 billion expected in the next. VMware shares, which have risen more than 60 percent in the past year, hit a record high on Thursday.

The PC market, which Michael Dell helped shape by founding Dell in 1984 as a University pre-med freshman with $1,000 in savings, has remained stagnant due to the popularity of smart phones and tablets, shrinking by 0.2 percent in 2017, according to International Data Corporation. That includes about United States dollars 3 billion of bonds maturing in 2018 and USD 4.35 billion due next year.

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As such, another path for the firm is just an IPO of Pivotal, a cloud software and services firm, which became a part of Dell following the acquisition in 2015.

Dell's $52.5 billion debt pile is expected to become more burdensome this year because the USA tax reform enacted last month caps a company's ability to deduct interest expense to 30 percent of its annual earnings before interest, tax, depreciation and amortization.

Dell and VMware couldn't immediately be reached for comment.

"In the past Michael Dell has criticised public markets and said how pleased he was to be a private company and that he didn't want to go back [to being listed]".


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