The battle for control of Dell is starting to get ugly. Carl Icahn has not just publicly questioned Michael Dell’s reputation, he’s pretty much broadcast to all and sundry that he thinks the PC legend is well past his sell-by date.
In his most recent pronouncement, Icahn claimed he and Southeastern (which is backing his bid) were "completely committed to bringing in management that we expect to be far superior to Michael Dell who we believe has had an abysmal record during the last three years".
Those are harsh words, but might they also be desperate ones? If money isn’t winning the argument (and let’s not forget Icahn is promising more per share than Michael Dell is) you have to wonder if Icahn is hoping doubts over his rival’s acumen might help tilt the balance his way.
I have to admit to having a few questions of my own when I read the following statement from Icahn: "We believe there would be several excellent candidates for this position who would be very interested in running this company once a clear mandate has been established." Really? He and his backers believe there are several excellent candidates out there who could run what is still, to all effects and purposes, a PC company? That’s some belief they have.
Given the most recent figures for PC shipments from Gartner and IDC (hint, they weren’t good), you have to wonder just who would want to take on the job of running Dell. Or any PC company for that matter.
Then there’s that phrase "once a clear mandate has been established". With Michael Dell’s bid, most people are fairly clear that he has an idea of what he intends to do with the company if he takes it private. With Icahn’s bid, the story now seems to be that once it has succeeded, excellent candidates will flock to be interviewed for the role of CEO with a clear mandate established. What will that mandate consist of exactly?
How clear will the mandate need to be for an excellent candidate to come in and take the company somewhere that Michael Dell wouldn’t have been able to take it? And how easily will the successful candidate be able to execute that mandate if he or she is an employee of Carl Icahn? If Michael Dell’s bid succeeds, he’ll be working for himself as well as his backers, he won’t be subject to somebody else’s mandate.
There’s some substance to Icahn’s criticism of Dell’s last three years in charge of the PC company. Truth to tell, they haven’t exactly been the glory years. But would anyone else have done anything differently? Any PC company operating in the IT industry today is subject to the plans and whims of two businesses: Microsoft and Intel. Very few have been able to navigate a successful path over the past few quarters, especially given the damp squib that was Windows 8.
Watching the fraught battle to gain control over Dell, it’s worth recalling the comments by Victor Basta, managing director of M&A advisory firm Magister Advisors following those infamous Gartner and IDC figures. "The PC era was over some time ago. We are just seeing it become starkly evident now," he commented.
Basta described the IDC and Gartner numbers as "a huge cloud over the recent Dell deal, which now looks like a mega deal headed for zero returns".
If he’s right, you have to wonder why on earth anyone would want to win a contest to own Dell-and why anyone would want to take the job of running it. It’s looking increasingly like a fight between two one-eyed men for a pair of spectacles that has only one lens still intact-and it’s in the wrong eye.
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