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What's Dell Really Worth?

Stocks in this article: DELL AAPL GOOG

NEW YORK ( TheStreet) -- On Thursday, Sept. 12, Wall Street will know the fate of Dell (DELL).

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.

Instead, management has bought companies like Quest Software and SonicWall. In lieu of mobile advancements, Dell has been trying to build its software portfolio by buying niche companies, thinking these businesses can offset the slumping hardware/PC businesses that have been hemorrhaging market share over the past three years.

Essentially, while enterprises have been steadily reducing their IT expenditures, Dell, which has bought companies and systems that support PCs, continues to invest in its enterprise footprint. All of that is to say, Dell is filled with assets and businesses that would thrive in 1993. In 2003 it's a different story. I don't blame Icahn, who is an investor, for fighting to a better deal. But with all due respect to Icahn, it doesn't appear as if his fight with Michael Dell makes any sense.

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