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Dell May Go Private After 2012 Deal Spree

Stocks in this article: DELL HPQ MSFT AAPL GOOG

(Story updated to include Sterne Agee comments and closing share prices.)

NEW YORK ( TheStreet) -- Dell (DELL), the No. 3 PC maker, is in talks to go private, according to reports from Bloomberg, citing two unnamed sources.

Dell is in discussions with multiple private equity buyers, sources told Bloomberg. Still, the talks are preliminary and could fall apart.

Sterne Agee analyst Shaw Wu wrote in a Monday client note that a potential takeover is possible but low in likelihood, given the financing needed to buy Dell, which currently has a market value in excess of $21 billion, and the PC maker's challenging competition. " A deal of this size would likely involve multiple PE firms, and we estimate the majority of its businesses (70%) remain under structural and secular pressure," Wu wrote in the Monday client note.

Dell is facing competitive threats from tablet devices made by Apple (AAPL) and Google (GOOG). Meanwhile, the Round Rock, Texas-based PC maker is losing PC market share to competitors Hewlett-Packard (HPQ) and Lenovo, according to a Monday analysis from RBC Capital Markets.

Sterne Agee analysts wrote earlier in January that after a 10% PC-market decline in 2012, Microsoft's (MSFT) launch of Windows 8 software and hardware may help the PC industry to low-single-digit growth in 2013.

Prior to the Bloomberg report, Dell had been active in a turnaround strategy that centers on becoming more competitive in software and technological services. Such a turnaround is in the mold of IBM's (IBM) transition to a software and services giant. HP, another struggling PC maker, is trying to embark on a similar change effort.

Dell ended 2012 as one of the most acquisitive tech companies of the year, buying up Quest Software for $2.4 billion. At the early part of the year, the Michael Dell founded company cut a flurry of deals for IT services specialists such as SonicWall, Wyse Technology and AppAssure Software.

Earlier in January, Bernstein Research analyst Toni Sacconaghi gave the PC-maker a sum of the parts value of $12 a share. Sacconaghi, noted that both Dell and HP being valued at their breakup value by some investors given a bleak outlook for a PC market turnaround. HP's individual assets, the analyst calculated, are worth $29 a share.

On Jan. 7, Dell said its head of M&A Dave Johnson left the company for private equity giant Blackstone Group (BX)

Founder Michael Dell owns 15.74% of the company's shares, according to Securities and Exchange Filings as of May 2012. In 2010, Dell said at a Bernstein investor conference he might consider taking the company private, but did not elaborate.

In Monday trading, Dell shares traded nearly 13% higher to $12.29. The company's stock has shed over 20% in the past 12 months, including Monday share price gains.

-- Written by Antoine Gara in New York

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