As investors follow Dell's LBO or BlackBerry's potential buyout, the question should be whether it is the right time in the life-cycle for either company to consider such a move? In both instances, the answer may be no.
Neither company has tried to sell off underperforming businesses or distribute cash to shareholders. Both companies also wasted billions of dollars in stock repurchases or ineffective turnaround attempts.
Shareholders in firms such as Nokia (NOK), Sony (SNE), J.C. Penney (JCP), or even at the most extreme, Microsoft (MSFT), should ask a similar question. Are those companies making the right moves to support their current equity value?
An alternative outside of a PE deal could be similar to the dismantling of Motorola in recent years.At one time, Motorola was a leading handset maker; however, the company eventually lost its customers to BlackBerry, Apple and Samsung. Carl Icahn, in Motorola's case, got the company to split-off its enterprise business Motorola Solutions (MSI) from its handset business Motorola Mobility, and was able to see a decent return on investment when Google (GOOG) bought the handset business for its intellectual property. Motorola Solutions continues to trade in public stock markets. At a current $15 billion market cap, it also may at a better point in its corporate life-cycle to consider a PE buyout than Dell or BlackBerry. -- Written by Antoine Gara in New York Follow @antoinegara
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