Who Can Build The Best Dell: Carl Icahn Or Michael Dell?


Call it the battle of the billionaires. Dell CEO Michael Dell and investor Carl Icahn are both willing to put up billions of their own capital to fight for a company that's future is unclear. But, so far the focus has been more on shareholder stock value than on Dell the company. What the future holds for Dell partners and customers is unclear should either Michael Dell or Icahn take control after a crucial shareholder vote on Thursday.

Michael Dell has declined interview requests to talk about how he wants to run Dell as a private company. When Bloomberg asked Icahn what he would do with Dell, he responded with his typical bravado: "I made an awful lot of money not having plans."

Private-equity firm Silver Lake Partners, which is backing Michael Dell, declined to comment on how it would manage Dell if it won shareholder approval. Icahn and Icahn-backer Southeastern Asset Management didn't return repeated calls seeking comment for this story.

To better understand Dell's future, it's best to look at potential owners' public statements and their track records.

The Michael Dell Plan:

In filings with the Security and Exchange Commission, Dell details the most complete plans yet should it become private. Dell said it will move quickly beyond commodity PC sales, which constitutes two-thirds of Dell's revenue and move to a company focused on enterprise solutions and services. It also said it would:

* Boost sales of corporate servers

* Focus on storage products that analyze data

* Develop software for mobile device security and for back-end quality assurance for corporate networks

* Spend $1.1 billion annually on new products and research and development

"Despite Dell's investments over several years, the company's transformation is still in its initial stages," the filings said. Dell wrote that the company will make significant incremental investments in end-to-end IT solutions, compete more aggressively in emerging markets, and make investments in PC and tablet business. "These steps in Dell's transformation are needed to restore the company to health in the long term. In the short term, however, they are likely to lower gross margins," Dell wrote in its SEC filings.

Silver Lake has publicly said it wants to expand the company's $1.1 billion in annual spending on new product research and development. This is a crucial area for Dell to grow, said Roger Kay, principal analyst at Endpoint Technologies Associates. He said the only way Dell will be able to spend that kind of money on R&D without having to significantly cut things such as Dell's 110,000 workforce is by not having to worry about revenue and delivering quarterly profits to Wall Street investors in the short term.

NEXT: Dell Hits Home With Partners, But What About Icahn?