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Financecarl icahn

No, Carl Icahn has not (yet) been vindicated on Dell

By
Dan Primack
Dan Primack
By
Dan Primack
Dan Primack
November 6, 2014, 12:05 PM ET
Getty Images photo illustration Coins2Day.com

Carl Icahn was right about Dell.

That’s the sentiment I’ve seen filtering through my Twitter feeds this morning, following a Bloomberg story about how the tech giant is now valued 90% higher than when Michael Dell and private equity firm Silver Lake bought the company last year for $24.9 billion. Icahn, as you might recall, argued that the valuation was absurdly low, and that Michael Dell was trying to “steal” his eponymous company. Nearly a 2x paper return in 12 months looks a lot like vindication.

But here’s the thing that’s missing in this knee-jerk analysis: Carl Icahn didn’t want Michael Dell to stick around.

In March 2014, Icahn announced plans to nominate a new slate of directors for Dell and that, if successful, Michael Dell would not be kept as CEO. A few months later, he added the following in an interview with Bloomberg Television: “Very often the founder of the company should not be running it later when it matures and I don’t think he has done a good job and I think the board has been asleep on the switch. They should have held him accountable years ago.”

To be sure, Icahn wasn’t alone in wanting a change at the top. The Blackstone Group (BX), which made a rival bid for Dell that it ultimately dropped, reached out to both Mark Hurd of Oracle (ORCL) and Michael Capellas (former CEO of both Compaq and First Data) about their interest in the job. But it is difficult to claim that Dell’s 90% valuation increase would have been identical with a different CEO. Unless Icahn and Blackstone would argue that the valuation would be even higher — a belief that was not reflected in either of their proposed valuations at the time.

As I wrote earlier this week, it is far too early to tell if Dell has really experienced a fundamental fix, or if its valuation is just riding the bull market wave like everyone else. But if it’s fixed, then Michael Dell would seem to deserve some of the credit. And if it only is worth more today because of macro conditions, then Icahn isn’t vindicated. At least not yet.

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By Dan Primack
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