Hi Ho the Derry-o, Headaches for Michael Dell

PUBLISHED: 16 Aug 2013 @ 13:56 | Comments (6) | More info about Lou Gutheil

You know it’s going to be an interesting day when you push the start button on your Dell (NASDAQ:DELL) tower, wait for your Dell monitor to come alive, you begin typing on your Dell keyboard and use your Dell mouse to direct your browser to the financial headlines that practically scream in your face that “Dell Profit Falls 72%.” I’m just glad that my printer is an HP.

Dell share price is at $13.70 this morning, not really much off of where they have been during the month of August. In fact, despite a spike here and a plunge there, here a chick, there a chick — oops, wrong nursery rhyme — Dell shares are pretty much where they were six months ago. Which is why super-investor, Carl Icahn, is in court today to try to prevent Michael Dell from purchasing the company he founded 30 years ago in his dorm room.

Michael Dell’s offer of $13.65 per share was well-received by the board, but not so much by some shareholders as Icahn has made his accusations that Mr. Dell has been trying to keep the company in a position whereby the share price will decline or, at least, not go above the $13.00 mark. In simple terms, the lower the share price goes, the greater the premium appears to be at $13.65 per share.

The foundation for Ichan’s argument is that Dell lost $5 billion in revenue in FY2012 and followed that with a 79% decline in first quarter earnings in FY2013. You can be sure that he will be adding the 72% second quarter earnings to his argument before the court this morning.

Dell will argue that the company’s struggle is based on the need to transform the business under the sole control of its founder. Michael Dell’s plan is much the same as Cisco’s (NASDAQ:CSCO) about which we reported yesterday. He envisions redefining the company to focus on corporate clientle where there is a greater demand for solutions. Icahn disagrees with that plan, as the competition is already entrenched in that market with the likes of IBM and HP. He feels that the Dell name may not have enough strength or product offering to be a Johnny-come-lately to a battle that is already fierce.

The NASDAQ is now open in New York and the Dell share price has risen to $13.71. It’s not making Mr. Dell’s offer of $13.65 very good at this point.

CLICK HERE TO REGISTER FOR FREE ON ADVFN, the world's leading stocks and shares information website, provides the private investor with all the latest high-tech trading tools and includes live price data streaming, stock quotes and the option to access 'Level 2' data on all of the world's key exchanges (LSE, NYSE, NASDAQ, Euronext etc).

This area of the ADVFN.com site is for independent financial commentary. These blogs are provided by independent authors via a common carrier platform and do not represent the opinions of ADVFN Plc. ADVFN Plc does not monitor, approve, endorse or exert editorial control over these articles and does not therefore accept responsibility for or make any warranties in connection with or recommend that you or any third party rely on such information. The information available at ADVFN.com is for your general information and use and is not intended to address your particular requirements. In particular, the information does not constitute any form of advice or recommendation by ADVFN.COM and is not intended to be relied upon by users in making (or refraining from making) any investment decisions. Authors may or may not have positions in stocks that they are discussing but it should be considered very likely that their opinions are aligned with their trading and that they hold positions in companies, forex, commodities and other instruments they discuss.