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Dell Buyout Marks Fork In Restructuring Road

For Dell investors, Silver Lake's investment in Skype and Icahn's breakup of Motorola are instructive.

According to an employee letter obtained by Fortune on Monday, Michael Dell appears to be focused on growing Dell's existing PC and services businesses as part of a takeover consortium.

Dell is currently "rolling" his 15.6% in the company into Silver Lake's $13.65 a share offer to help fund the buyout. Still, Dell may choose to switch to the Blackstone-led consortium that's offering $14.25 per share along with the option to continue to hold publicly-traded stock, according to some media reports.

As TheStreet noted in late-March, there are some reasons investors may see Icahn's $15 a share proposal for Dell as the best current offer even if it's probably the least likely to win support from the company.

How Dell decides to proceed on its takeover may have enormous ramifications for other struggling tech companies that have suffered as their product became indistinguishable from competitors and vulnerable to falling prices. The "commoditization" of once-powerful businesses has been the death knell to many a company.

Indeed, investors continue to speculate whether BlackBerry will survive the smartphone and tablet wars. The Canadian company may eventually confront a breakup of its own or be sold to a strategic acquirer.

Meanwhile, Nokia has bet its future on the still uncertain competitiveness of Microsoft's Windows 8 smartphone and tablet software. That's a move that could prompt a merger.

BMC Software and Compuware are both reported to be fielding bids from private equity firms after hedge fund Elliott Management pressed the takeover of both companies in 2012.

In the case of BMC Software, Elliott outlined why the company's disparate hardware assets could be split or sold, and then tendered an offer for all of Compuware shares. That bid was summarily rejected by management.

Hewlett-Packard, meanwhile, faces a turnaround that CEO Meg Whitman says could take as long as five years. That process may also force asset disposals if activist investors decide to confront management, or operating performance further deteriorates.

All told, Dell's takeover may be far more intriguing for what it says about how to deal with struggling technology businesses than the eventual price of a deal.

-- Written by Antoine Gara in New York

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