Dell Technologies is once again exploring the sale of its cybersecurity subsidiary, SecureWorks, after previous unsuccessful attempts. The move comes as Dell continues to streamline its operations and capitalize on the growing interest in artificial intelligence (AI) technologies.
Key Takeaways
Dell is considering selling SecureWorks, a cybersecurity firm it acquired in 2011.
Investment bankers at Morgan Stanley and Piper Sandler are involved in the process.
SecureWorks has a market value of approximately $800 million.
Dell owns 79.2% of SecureWorks and controls 97.4% of its voting stock.
SecureWorks shares surged by 34% following the news but later pared gains.
Background
Dell Technologies, based in Round Rock, Texas, and founded by CEO Michael Dell, has been shedding non-core assets in recent years. The company acquired SecureWorks for $612 million in 2011 and later listed its shares through an initial public offering (IPO) in New York in 2016. Despite these efforts, SecureWorks has struggled to compete with larger cybersecurity providers, leading to a significant drop in its share value since its peak in September 2021.
The Sale Process
Dell has enlisted the help of investment bankers at Morgan Stanley and Piper Sandler to gauge interest from potential buyers, including private equity firms. However, a deal is not guaranteed, and Dell may choose to retain ownership of SecureWorks. The discussions are confidential, and neither Dell nor the involved investment banks have commented on the matter.
SecureWorks' Performance
SecureWorks, founded in 1998 and based in Atlanta, Georgia, offers a range of security services aimed at protecting corporations from cyberattacks. Its flagship cloud-based platform, Taegis, is designed to detect advanced threats. Despite its innovative offerings, SecureWorks has faced challenges in differentiating itself in a competitive market. The company's shares have lost more than two-thirds of their value from their September 2021 peak.
Dell's Strategic Moves
Dell's decision to explore the sale of SecureWorks is part of a broader strategy to focus on its core business areas. The company has been riding a wave of investor enthusiasm for AI, with its profits boosted by strong demand for AI-focused servers. Dell's shares have risen by about 46% this year, outperforming the S&P 500 index, which has seen an 18% increase.
Future Outlook
SecureWorks is scheduled to report its second-quarter results on September 5. The outcome of these results could influence Dell's decision on whether to proceed with the sale. As the cybersecurity landscape continues to evolve, SecureWorks' ability to adapt and innovate will be crucial for its future success.
While the potential sale of SecureWorks remains uncertain, Dell's strategic focus on AI and core business areas highlights its commitment to staying ahead in a rapidly changing technological landscape.
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Sources
Exclusive: Dell attempts to sell cybersecurity firm SecureWorks again, sources say | Reuters, Reuters.
Exclusive-Dell attempts to sell cybersecurity firm SecureWorks again, sources say | The Mighty 790 KFGO | KFGO, KFGO.
Dell attempts to sell cybersecurity firm SecureWorks again, sources say, ZAWYA.
Exclusive-Dell attempts to sell cybersecurity firm SecureWorks again, sources say | WTAQ News Talk | 97.5 FM · 1360 AM | Green Bay, WI, WTAQ.
Exclusive-Dell attempts to sell cybersecurity firm SecureWorks again, sources say - MarketScreener, marketscreener.com.