Michael Dell believes he can turn around the company by diversifying into more profitable niches such as business software, data storage and consulting. It could be a wrenching process.
The Blackstone letter said that while the bidders still believe Dell is “a leading global company with strong market positions,” it also cited Dell's “rapidly eroding financial profile.” It noted that Dell has lowered its operating income forecast for this year to $3 billion, from $3.7 billion. That $3.7 billion, in turn, had been lowered this year from a $5.6 billion figure that Dell had circulated internally in July, according to regulatory filings.
Shares of Dell fell 55 cents, or 3.9 percent, to close at $13.40 on Friday and slipped to $13.37 in after-hours trading. It's the first time since Feb. 11 that the price has dropped below the Michael Dell group's offer price, indicating that investors no longer believe a higher bid will emerge.