Is Dell worth the fight as outlook bleak?
Print Edition
Months of public bickering, secretive backroom negotiations and eleventh-hour deals for control of Dell Inc belie the fact that the combatants are vying for a company facing steadily declining sales prospects.
The tussle between Chief Executive Michael Dell and firebrand activist investor Carl Icahn is also starting to spook some customers.
It’s the last thing a company, grappling with the ever-darkening global outlook for personal computers, needs. IDC estimates Dell’s PC shipments slid 4.2 percent in the second quarter, compared to a year earlier.
Some customers have begun asking if Dell is even going to be around in the longer term, said Michael Gavaghen, vice president of sales and marketing at Florida-based Dell reseller SL Powers. Sales are taking longer to close as well, he said.
“We hold their hand and gently say to just table the purchasing decision another few weeks,” said Gavaghen. He stressed, however, that customers are “not fleeing by any means.”
The cacophony surrounding the US$25 billion buyout bid proposed by Michael Dell and Silver Lake Partners has picked up over the past month. Icahn threatened to wage a campaign to replace the CEO and his board, and sued the company in Delaware to try to force an earlier shareholder vote.
Michael Dell raised his offer twice to try to win over major investors. A shareholder vote has been set for September after being delayed three times.
Morale within the company is stable for now, say some employees, though that could change rapidly if Icahn has his way and were to reshuffle management.
John Pucillo-Dunphy, senior engineer and owner of Miracle Networking Solutions, a Dell reseller, said he backs Dell going private and is more comfortable with Michael Dell’s leadership since it is unclear what Icahn’s long game is.
“I have seen the e-mails from Michael Dell. I haven’t seen anything from Icahn,” Pucillo-Dunphy said.
Icahn, the second-largest shareholder with 8.9 percent, has said little about what future he envisions for the firm beyond that it has promising prospects based on its large base of PC customers, and that it should remain partly public.
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