Dell considers going private

Dell is in talks with private equity firms on a potential buyout, according to a source, confirming a Bloomberg report that sent its shares soaring 13 percent to near an eight-month high.

Bloomberg reported earlier today that the world's No. 3 PC maker is in talks with at least two private equity firms about going private. The discussions are preliminary and financing has not been secured, the report said.

Dell, which has steadily ceded market share to HP and Lenovo in recent months, declined to comment on what it called rumours and speculation.

Some analysts say taking the company private - an idea that has surfaced sporadically in past years - makes sense.

Dell has lost 40 percent of its value since last year's peak, and is in the midst of an attempt to reinvent itself from a traditional PC maker into a service provider.

Other analysts pointed to the sheer expense of such a deal, an outsized debt burden of some $US4.5 billion ($A4.3 billion) and murky prospects as a major player in a PC market that's dwindling with the advent of tablets such as Apple's iPad.

"The market value of Dell has come down so much that a buyout has become something that is plausible. They have about $US5 billion in net cash and also free cash flow generation that could sustain payments on debt from a leveraged buyout," said S&P Capital IQ analyst Angelo Zino.

"However, we think it's unlikely, given the sheer size of Dell and where the stock is currently trading at."

A buyout of the $US19 billion company would become one of the largest deals since the global recession.

Downward spiral

The company's PC shipments plummeted 21 percent in the fourth quarter, according to IDC. In the third quarter, its profit slid 47 percent. 

On Monday, another industry research firm, Gartner, estimated that Dell lost 2 percentage points of market share in the fourth quarter, slipping to 10.2 percent from 12.2 percent a year earlier.

Dell's fortunes have waxed and waned. In 2007, billionaire CEO Michael Dell - whose company was an early pioneer of just-in-time inventory management and online sales of custom-built computers - returned to the company he founded to revive its business.

Michael Dell revealed at a Sanford Bernstein investors' conference in 2010 that he had once considered taking private the company. Dell told investors a transformation of his company that he had hoped to effect upon his return was "incomplete".

Those comments triggered a round of speculation, but most analysts said buying out such a large company would be difficult because of the massive financing requirements.

Michael Dell now owns more than 14 percent of the company, according to Thomson Reuters data, and last year was ranked the 22nd richest American with a fortune of $US14.6 billion.

Dell's stock soared to an intra-day high of $US12.83 in afternoon trade - the highest since May 2012 - after a brief trading suspension. It closed at $US12.29.