UPDATE 3-Dell CEO says considered taking company private
* CEO says transformation of Dell not complete
* CEO says looking at smaller deals
* Shares close up 4.9 pct (Adds analyst's comment, stock movement, paragraphs 2-5)
SAN FRANCISCO, June 3 (Reuters) - Dell Inc's DELL.O Michael Dell revealed on Thursday he had once considered taking the company he founded private, sending shares in the No. 3 PC maker surging as much as 6.4 percent.
The comment caused the stock to spike a half-hour before the market's close on speculation about a buyout premium, but analysts said many pieces would have to fall in place for such a deal to happen.
Kaufman Bros analyst Shaw Wu said Dell going private was not out of the question, but said it would take plenty of outside financing and would not change the company's structural problems or necessarily improve its ability to compete with the likes of Hewlett-Packard Co (HPQ.N) and Apple Inc (AAPL.O).
"It's possible, but it would require a lot of funding. They would probably need private equity and some other financing," he said.
Many of Dell's investors remain focused on current concerns, such as an ongoing effort to turn around the once-dominant PC maker by focusing on higher-margin technology services rather than PC sales, and staking out a footprint in a crucial wireless device market.
Dell's CEO said that transformation is incomplete.
In response to a question at the Sanford C. Bernstein investor conference, Dell said he has considered taking Dell private but would not comment when asked what would make him think about the possibility more seriously.
He also said he was committed to running the company.
A Dell spokesman also declined to comment further.
According to data compiled by Thomson Reuters, Dell is the largest single shareholder in his namesake company, with an 11.6 percent stake.
FROM COLLEGE TO WALL STREET
Michael Dell famously founded the company in 1984 while a student at the University of Texas. Dell, which went public in 1988, pioneered a unique business model by selling PCs directly to customers.
But after a period of huge growth that culminated in the company's claiming the title of world's biggest PC maker, Dell has struggled over the past few years. It has fallen to No. 3 in the global rankings on a unit basis and lost market share to HP (HPQ.N) and Acer Inc. (2353.TW)
Dell stepped down as CEO in 2004, but returned to the post in 2007, raising hope among some investors.
The company has been shedding jobs and cutting costs as it focuses on profitability over growth, and Dell has been trying to diversify its business away from its core of low-margin PCs.
But PCs still account for roughly half of the company's revenue.
"I think this is a company that can grow its operating income in dollars pretty substantially and that's our intent," Michael Dell said at the investors' conference.
"If people look at the progress around services...and the server business, there's a whole lot there to like," he said.
Last month, Dell reported quarterly sales and profit that beat expectations, but its gross margin fell short of analysts' forecasts. [ID:nN20149934]
In 2009, Dell made its largest acquisition, buying technology services provider Perot Systems for $3.9 billion.
When asked about the company's future M&A deals, Dell said there is "not necessarily" a high probability that the company would make an acquisition of more than $2 billion, instead focusing on smaller deals.
Shares of Round Rock, Texas-based Dell closed up 4.9 percent at $13.76 on the Nasdaq. (Reporting by Gabriel Madway, Editing by Edwin Chan and Leslie Gevirtz)
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