Analysis of Dell’s Potential Sale of SecureWorks Impact of Dell’s Strategic Sale Evaluation on SecureWorks Shares

Written By Michael Gary Scott

Dell Technologies Inc DELL is contemplating the sale of cybersecurity company SecureWorks
Corp
SCWX,
according to reliable sources as reported by Reuters.

Diving Deep into the Financial Waters

Speculations arose in 2019 when Dell considered selling SecureWorks to alleviate its debt burden.
Initially purchased for $612 million in 2011, the cybersecurity firm may soon witness a change in
ownership.

Market Reactions and Volatility

With the news circulating, SecureWorks’ stock experienced a dip of almost 4% on Friday, following a 20%
surge the previous day. Conversely, Dell saw a 6% increase during premarket trading on Friday.

Thursday’s earnings report by Dell indicated an impressive 9% growth in second-quarter revenue, reaching
$25.03 billion, surpassing the analyst consensus of $24.14 billion. However, the company also disclosed a
significant long-term debt standing at $17.8 billion as of August 2, 2024.

Exploring Mergers and Acquisitions

For potential acquirers, Dell has engaged investment banking firms, including Morgan Stanley and Piper
Sandler, to assess interest in a takeover. Private equity entities are among the speculated suitors
eyeing SecureWorks.


Currently valued at $772 million, SecureWorks is predominantly owned by Dell, holding 79.2% of the company
and controlling 97.4% of its voting stock.

Steady Growth Amidst Uncertain Waters

SecureWorks demonstrated resilience in the market as it surpassed first-quarter revenue expectations with
$85.7 million. Taegis, a subsidiary, saw its revenue climb by 10%, reaching $69.1 million. The company
foresees second-quarter revenues between $80 million to $82 million, slightly below the analyst estimate
of $81.2 million. Investors have witnessed a 31% rise in SecureWorks’ stock over the past year.

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Current Stock Performance

Price Movements: SCWX shares reported a 3.67% decline, trading at $8.41 during the
premarket check on Friday. Conversely, Dell observed a 6.40% upsurge, reaching $117.83 in early trading
on the same day.

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