Iceberg Ahead for Dell Inc. (DELL) Shareholders

Moreover, while Icahn Enterprises LP (NASDAQ:IEP)’s group may have enough votes to sink the go-private transaction, it is highly unlikely that they have enough votes to take control of the board. Michael Dell cannot vote on the go-private deal because of his conflict of interest, but if the deal falls through, his 16% ownership stake in the company will come back into play. Since he will certainly vote against Icahn’s proposed board, Icahn will have to get far more than 50% of the “unaffiliated” stockholders to support his proposal. Given that the vote totals have reportedly been very close to 50-50 so far, Icahn seems certain to fall short.

Unfortunately, that would leave Dell Inc. (NASDAQ:DELL) in “status quo” mode. With analysts expecting adjusted EPS to plummet to $1 this year (from $1.72 last year) due to PC market weakness and margin compression, the status quo is not something Dell shareholders should look forward to. The Dell special committee estimated early this month that Dell’s stock could trade between $5.85 and $8.67 if the buyout fails.

Bad situation
Dell Inc. (NASDAQ:DELL) shareholders have no good options right now. The ongoing battle between Carl Icahn and Michael Dell is turning ordinary investors into collateral damage. Neither Icahn Enterprises LP (NASDAQ:IEP) nor Dell appears to have enough votes to enact their preferred scenario. However, both sides have dug in and so neither is likely to give up and sell to the other. Right now, Dell (the company) needs leadership and stability, yet the proxy battle is causing chaos. At the end of the day, Dell’s competitors are likely to be the only ones who are happy.

The article Iceberg Ahead for Dell Shareholders originally appeared on Fool.com.

Fool contributor Adam Levine-Weinberg has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

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