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Dell Earnings Don't Matter If Icahn Campaign Hardens

Were Dell eventually to agree to Icahn's proposal, the deal would look like a leveraged recapitalization of the company for shareholders who take the $12 cash dividend that Icahn plans to finance using $5.2 billion in debt, Dell's cash stockpile and other unutilized assets.

On Monday, Icahn proposed himself and five other nominees to Dell's board of directors, while Southeastern proposed six nominees.

Whether Icahn and Southeastern succeed in financing a formal offer for Dell or winning the support of shareholders and Dell's board of directors will matter far more than Dell's first quarter earnings.

The consensus estimate among analysts is for Dell to report first-quarter earnings of 35 a share on revenue of $13.5 billion, according to Bloomberg. The company is forecast to post an operating profit of about $820 million as its gross margin comes in at 22.1%.

CNBC reports Dell's revenue may hit expectations, but that the company earnings per share may come in at 20 cents, missing estimates.

A significant earnings miss may convince some shareholders to take the certainty of Silver Lake's cash buyaout over Icahn's riskier, but possibly more lucrative recapitalization, according to ISI Group analysts.

-- Written by Antoine Gara

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