Tags: Goldman | Buyout | Possible | Dell

Goldman: Leveraged Buyout Possible for Dell

Monday, 03 Dec 2012 04:32 PM

Shares of Dell Inc. rose the most in more than a year Monday after Goldman Sachs Group Inc. upgraded the stock to buy and said the company’s net cash balance could present an opportunity for a leveraged buyout.

The shares ended up 4.4 percent at $10.06 in New York after gaining as much as 8.8 percent for the biggest intraday jump since August 2011. The shares had declined 34 percent this year through Friday, while the Standard & Poor’s 500 Index had advanced 13 percent.

Dell, the No. 3 personal computer maker, is struggling as companies wait to upgrade machines and consumers turn to smartphones and tablets like Apple Inc.’s iPad and iPhone. While demand for PCs has declined, Dell’s net cash balance of $5.15 billion provides “some downside buffer as it produces opportunity for an LBO or levered recap under the right conditions,” Bill Shope, a Goldman analyst, wrote in a note.

“Dell has become an attractive deep value play and we would be buyers of the stock,” he wrote.

Shope, who previously rated shares sell, also raised his price target on Round Rock, Texas-based Dell to $13 from $9.

Dell on Nov. 15 forecast a fourth-straight quarter of declining sales, indicating fiscal fourth-quarter revenue will be $14 billion to $14.4 billion. That was less than the $14.5 billion average estimate of analysts.

PC shipments tumbled 8.3 percent in the calendar third quarter from a year earlier, according to market researcher Gartner Inc., and are projected to decline this year for the first time since 2001, according to IHS iSuppli.

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