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Why Does Dell Keep Attacking Its Own Business?

NEW YORK, July 7, 2013 /PRNewswire/ -- Carl C. Icahn and his affiliates today issued the following letter to stockholders of Dell Inc.

Dear Fellow Dell Stockholders:

Over the last 50 years I have studied and dealt with hundreds of companies.  In many cases, I have criticized boards and directors for blatant mismanagement and misdeeds. I have seen some awful things done to shareholders.  But I have never seen a board conduct a campaign to demean the business prospects of their own company in the way Dell has during the past few weeks.

Why have they done this?  In my opinion, they wish to frighten stockholders into selling Dell to Michael Dell and Silver Lake, at what I believe is a bargain price. There is nothing subtle in the approach of the Special Committee, as evidenced by the recent article by Rolfe Winkler of Dow Jones entitled "Scaring the Dell Out of Investors."  The height of this audacious campaign has come Friday July 5, when Dell issued what I believe was a brazen attempt to scare ISS into approving the "uncontested" Dell offer.  In this presentation, Dell issued pages of confusing and obfuscating statements, but it is interesting to note that they never changed their projections in which they have Dell earning $3 billion of operating income for the year.

I have obviously done a great deal of research concerning Dell.  My simple conclusion is that I believe the PC business is not going away, but the industry is changing.  Dell, for many reasons, will benefit from these changes.  For example, their recent investments of $13 billion in enterprise software and other non-PC businesses is already beginning to show results.  And, I believe that there are many opportunities to enhance the value of Dell through cost savings.  I believe that the Board could have and should have given all shareholders the opportunity to benefit from these developments, and not just their "favorite son."  My proposal of a $14 per share Dell tender, coupled with the ability to remain as a stockholder in Dell, gives stockholders that choice.  

I am known as an astute investor and I am not inclined to make a huge investment lightly.  I am proposing a total risk to my affiliates and myself of $5 billion (including our existing equity and proposed debt financing) and thereby provide an alternative to Michael Dell and Silver Lake acquiring the company at what I consider to be a bargain price. I have not risked $5 billion merely to get a bump from Michael Dell and Silver Lake. I have risked it to have a large investment in a company with great potential.

I urge stockholders to take this opportunity to stand up to the board that we believe presided over a number of mistakes made by Michael Dell in operating Dell over the last four years.  Instead of holding him accountable for mistakes, they have chosen to award him and his new partners the opportunity to acquire our entire company at what I believe is a bargain price.  It is time to hold this board as well as Michael Dell accountable and vote "no" to the proposed Michael Dell /Silver Lake deal, rather than allowing them to "freeze us out."


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