Michael Dell Buys Another $100m-Worth of Dell Inc Shares

10 September 2008

ROUND ROCK, Texas: Growing speculation surrounds the latest purchase by Michael Dell (pictured) of another massive tranche of Dell Inc shares – reportedly worth  around $100 million (€70.79m; £57.0m) – his second such purchase within one month.  

The firm's eponymous founder also acts as its chairman and ceo. He now owns over 225 million of the company's shares, with another 29m controlled by his wife, Susan, or a gift trust. The joint holdings equate to around 13% of the company. 

The motives underlying the buying spree are undeclared – hence the current tsunami of speculation. During the year's first half, Dell stock rose by some 40% thanks to the firm's seeming turnaround in fortunes.

Since August however, around half that gain was lost after Q2 profits fell 17% year-on-year, trailing Wall Street's expectations. The plunge was partially attributed to the effect of the company's aggressive pricing on its bottom line.

So why the bulk buying of stock in an otherwise bear market?

There's no shortage of hypotheses: An attempt to prop-up the sagging price? A prelude to taking the company private? Buying long to sell short?

Perhaps the most likely scenario is the latter, given Dell's plans, revealed last week, to unload most or all of its global manufacturing capacity over the next eighteen months and sub-contract production to the sites' buyers.

Such a scheme, if successful, would propel Dell's stock price into orbit.

Data sourced from Austin American-Statesman (USA); additional content by WARC staff