Hewlett-Packard Co. (NYSE: HPQ) is among the tech companies that had comments on the leveraged buyout of Dell Inc. (NASDAQ: DELL). The comments mostly were directed at Dell customers and future customers, who might consider the buyout as a sign that Michael Dell’s company is somehow wounded. If that is true, why would anyone do business with it.
Dell has a very tough road ahead. The company faces an extended period of uncertainty and transition that will not be good for its customers. And with a significant debt load, Dell’s ability to invest in new products and services will be extremely limited. Leveraged buyouts tend to leave existing customers and innovation at the curb. We believe Dell’s customers will now be eager to explore alternatives, and HP plans to take full advantage of that opportunity.
Dell probably took the same position with customers when HP was in the midst of one of its several restructurings and false steps to diversify.