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After one of the largest technological acquisitions in our history, Dell SecureWorks will go public in order to raise funds, with the parent company Dell filing an IPO. The stock market will welcome its new participant under the name of SCWX.
Dell, one of the biggest manufacturers and distributors of technology-based products, made SecureWorks its subsidiary back in 2011, for the total price of $612 million. Even if the Atlanta-based company SecureWorks was hoped to bring a massive profit to its parent company, it, unfortunately, suffered major losses in 2015.
SecureWorks acts like an IT guard dog, a cybernetic security service meant to protect small or large companies from malware and hackers. The IT infrastructure protection is made through the use of online cloud, its access being made through a monthly subscription, with over 4000 clients from 85 countries benefiting from it at this point. SecureWorks analyzes on a daily basis around 150 billion events that might pose a threat to its clients corporation infrastructure.
Following a rise in its revenue, racking up $245 million through October of this year, SecureWorks showed a rather large improvement, when compared to the same period of last year’s revenue, $190 million. Even so, its gross margin of $111.3 million made the company lose a net sum of $57 million in sales and marketing.
The move of making SecureWorks public, allowing its shares to be traded in on the stock market, is caused by Dell’s acquisition of ECM. This was made for the massive sum of $67 billion, and it will bring the subsidiary VMWare alongside its parent company ECM under the tutelage of Dell once everything gets sorted out.
Dell’s choice of going from the public market to the private sector was made by its current CEO, Michael Dell, back in 2013. He controls at the moment 71% of the company’s shares and is the sole owner of SecureWorks. The rumor that the CEO will trade his stakes alongside his company’s shares was dismantled by Michael Dell himself.
Even if the SecureWorks IPO is hoped to bring a massive boost to its parent company’s funds, investors are expecting Dell to suffer a large hit, forcing it to carry out a loan of $50 billion in order to pay ECM’s complete acquisition. The payment of the ECM acquisition will also be boosted by the alleged Dell plan of slowly starting to sell parts of the company.
This plan will begin with selling the outsourcing program Dell previously bought back in 2009 through the $3.9 billion acquisition of Perot Systems. The price of this outsourcing business is expected to be placed at $5 billion. If the will find a buyer for this company, only time will tell.
Taking into account the fact that Dell SecureWorks will go public in order to raise funds, it might make investors think that the future of Dell is starting to look a bit unstable. This is mainly due to the massive deal made with ECM, the odds of Dell biting off more than it can chew being fairly high at this point. The first quarter of 2016 will show both the market as well as the general public if Dell is starting to slowly go under or not.