What's Dell Really Worth?
This is the day investors will vote on whether to accept the $24.4 billion offer from Michael Dell and Silver Lakes Partners, which want to take Dell private. The proposal, first presented to shareholders nine months ago, values the company at $13.65 per share -- not far from Dell's Friday close of $13.84. But is that price fair?
Activist investor Carl Icahn, who countered with a $14 per share offer, feels the privatization bid at $13.65 is a slap in the face. Icahn certainly has a point. But here's my problem: Given Dell's brutal underperformance over the past couple of years, I don't believe there's anyone who can say with a straight face that he/she knows what this company's underlying value really is.
It's not as if any sudden deal is going to immediately change Dell's fortunes in the realm of mobile devices against Apple (AAPL), Samsung and Google (GOOG). No matter how you look at it, I believe Dell's fate has already been sealed.Making matter worse is the company has spent the past couple of years throwing good money after bad, thinking, "Let's buy our way out of this mess." It hasn't worked. Nor have any of these recent investments (if you can call them that) done anything to shore up Dell's weakness in mobile.
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