Dell Inc. (DELL): Some More Icahn Info Hitting The Wire

Another company that could be compared to Dell Inc. (NASDAQ:DELL) is Lexmark International Inc (NYSE:LXK). Though the company mainly deals in the computer printer and service space, it does face the same type of business disruption caused by recent demand shifts within the personal computer industry. Also, like Dell Inc. (NASDAQ:DELL), Lexmark is trying to transition from a hardware-centric to a solutions-centric company.

Lexmark reported adjusted revenue of $886 million in its latest quarter, a decline of 11% compared with last year. It also posted adjusted earnings of $0.88 a share, a 16% drop compared to the $1.05 a share previously. Assuming $3.5 billion of expected full year revenues and $354 million in earnings, Lexmark currently trades at a current market multiple of 5.6.

The stock market’s current view would also seem to support that a stabilization of Dell Inc. (NASDAQ:DELL)’s business is possible and that a multiple of five is reasonable. The peer multiple valuation range of between 5.6 and 7.0 indicates that though it may be difficult and take some time, there is a decent chance that both Hewlett-Packard Company (NYSE:HPQ) and Lexmark can successfully steady their results.

Conclusion

Carl Icahn and Southeastern Management are offering shareholders a compelling alternative to Michael Dell’s go-private bid. The activist’s recapitalization plan of cash and stub share looks like it might be reasonably worth more than the proposed $13.65 currently on the table. If one believes that the company can reach a moderately secure future, the recap plan should probably be given full consideration.

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