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7/25/2013
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Can Michael Dell's New Offer Sway Investors?

Dell CEO delayed a shareholder vote on his buyout plan for the second time. He's betting his new and allegedly final offer will secure victory.

Icahn issued a statement decrying the extended voting delay.

"We think that – after six months – the time for soliciting is over," he wrote. "Do not move election day again."

Echoing statements he's made throughout the buyout process, Icahn also broadcast his sentiments over Twitter: "All would be swell at Dell if Michael and the board bid farewell."

Icahn's alternative deal offers $14 per share but keeps the company partially public. It also includes a warrant that allows investors to purchase additional shares later. Icahn has loudly contended that Michael Dell's proposal undervalues the company's long-term potential. Given the protracted voting drama, many Dell shareholders seem to agree.

Icahn's critics point out that he hasn't specifically articulated what Dell's long-term potential entails, however. Icahn's argument has focused more on Dell's ineffective leadership, and on the board's alleged failure to prioritize investors' best interests.

Icahn hasn't said whom he'd advocate for CEO, or how the company will operate if it takes on the amount of debt included in his proposal. If Michael Dell's offer is rejected, Icahn would still have to convince investors at a future meeting to remove the CEO. Under Michael Dell, the company has struggled to deal with the PC slump. That said, it has also projected a clear ambition: to become a major enterprise software and services player. Over the last several years, the company has assembled a variety of assets that can now be connected as end-to-end enterprise products but it's competing in a tough space, with HP, Cisco and many others.

Even in a best-case scenario, it will take a couple of years to rebalance Dell's revenue streams, which are currently too reliant on PC sales. This reality is the reason Michael Dell wants to go private -- and soon, investors will decide if he has the chance.

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