By Dan Gallagher, MarketWatch
SAN FRANCISCO (MarketWatch) -- Shares of Dell Inc. slid Friday
afternoon following a report that CEO Michael Dell and Silver Lake
will not be raising their proposed privatization bid for the PC
maker, which is due to come to a shareholder vote later this
month.
The tech sector managed to keep decent gains heading into the
afternoon, with the Nasdaq Composite Index (RIXF) up 0.6% to 3,466
and the Philadelphia Semiconductor Index (SOX) jumping by 1%. The
Morgan Stanley High-Tech Index (MSH) picked up 0.5% by the
afternoon.
But Dell (DELL) took a significant tumble, falling nearly 3% to
$12.95 -- representing the first time the stock has fallen below
the $13 mark since the company announced the privatization deal on
Feb. 5.
Bloomberg, citing unnamed sources, said Dell and Silver Lake
believe their offer "represents a fair and significant premium" to
what the stock would trade at if the deal fell through. The offer
has come under opposition from several large Dell shareholders --
including activist Carl Icahn -- who argue that the company is
worth more than the $13.65 per share offered in the deal. Icahn is
leading an alternative re-capitalization effort.
Dell shareholders are slated to vote on the privatization offer
at a special meeting on July 18. In a filing earlier on Friday, the
special committee of Dell's board warned of "substantial downside
risk" for the stock if the deal falls through.
The filing also pointed out the risks of Dell's efforts to
transform into an enterprise IT business to diversify away from the
slowing PC business. It noted that the planned transition "is
risky, expensive and a multiyear process," adding that the company
has spent $13 billion on acquisitions so far as part of this
process.
"As the environment continues to evolve rapidly, additional
investments and acquisitions are likely to be required to complete
the transformation," the filing said.
Shares of archrival Hewlett-Packard (HPQ) jumped 1.9%; the Dell
filing noted that the company's "recent performance has been
superior to Dell's" in its filing.
Apple (AAPL) shares slipped by 0.8% to $417.30. Arch-rival
Samsung Electronics reported lower-than-expected smartphone
shipments for its June quarter, with analysts pointing to sales of
the Galaxy S4 flagship device that may have been below estimates.
Sales of the iPhone 5 and Galaxy S4 may be crimped by slowing
demand at the high end of the smartphone market.
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