Investors have become numb to the idea that there's still a story here.
What's unclear is Dell's underlying value. It's been eight months since Michael Dell, along with Silver Lake Partners, offered of a proposal to take Dell private at a price of $13.65 per share, which valued the deal at $24.4 billion. I thought this was a suitable offer for a company that has grossly underperformed over the past five years. The stock, as you would expect, has flat-lined ever since.
However, with the company hemorrhaging revenue, earnings and market share each quarter, it's anyone's guess as to what Dell is truly worth. Activist investor Carl Icahn, who has been in a tug-of-war with Michael Dell over the company's ownership, thinks he knows how to realize that value. Given the performance of Icahn's investments to date -- a portfolio that now includes Apple -- I tend to believe him.
Dell has had plenty of time to adapt to the dominance of Apple and Samsung in the rise of mobile devices. Not only has the company failed miserably, but there's been no real attempt to mount a response. As I've discussed recently regarding BlackBerry , I don't foresee how a privatized Dell will emerge in better shape than it is today. Nevertheless, on the heels of another brutal second-quarter report, today there's no place to hide.
Due to the company's overreliance on a dying personal computer industry, Dell couldn't even meet Street profit estimates, which were already lowered to $275 million. Interestingly, though, this awful quarter may actually work in Michael Dell's favor. He's been adamant about how Dell has no other recourse that the path that he and Silver Lake Partners have chosen. Icahn disagrees.
Essentially, had the company posted better results, this would have fueled the flames of Carl Icahn, who insists Dell can still perform for its investors with better management. So, oddly enough, with a 72% decline in profits, Michael Dell's $24.9 billion privatization proposal looks a bit more appealing to frustrated investors, who, by not accepting, risk further financial decay.
To that end, I don't believe it serves the interest of shareholders that Michael Dell remains in his CEO role, at least not until the Sept. 12 vote occurs. There is an obvious conflict of interest here. That this divergence has not already been raised is surprising. I don't believe Michael Dell wants the company to show any signs of life until he and Silver Lake Partners, get what they want. It's human nature.
Look, I don't have a dog in the fight. But if Michael Dell believes he can fix Dell's struggles by going private, so be it. From my vantage point, though, I believe that any route Dell is able take from here is much better than the status quo. But here's the thing; I also can't ignore the progress that rival Hewlett-Packard has made under Meg Whitman, albeit modest improvements.
Let's not also discount how well Lenovo seems to be adapting to the global PC decline while the company has begun a meaningful transition into its own line of mobile devices. There are now rumors that Lenovo may buy BlackBerry, which makes plenty of sense.
In that regard, Dell gets no sympathy from me. Michael Dell wants take his ball and go home. Everyone wants to go out on his or her own terms, and that's fine. But let's not make it about "what's best for Dell." He's not riding off into the sunset. We're beyond that now. What's best for shareholders, in the meantime, is that he removes himself to preserve the integrity of this whole process.
At the time of publication, the author was long AAPL.
This article was written by an independent contributor, separate from TheStreet's regular news coverage.