Dell shareholders face a week of heated lobbying

• Dell proxy fight extended until next Wednesday
• CEO Michael Dell and investor group lack enough votes to win control
• Activist investor Carl Icahn and allies say offer undervalues company

SAN FRANCISCO — Michael Dell, Carl Icahn and their allies are lobbying Dell shareholders overtime ahead of a proxy vote next week that could decide the fate of the troubled personal computer company.

Shareholders are expected to cast ballots at a special meeting rescheduled for Wednesday at the company's Round Rock, Texas, headquarters. A majority vote in favor of the plan backed by founder Dell and Silver Lake Partners would lead to a speedy overhaul as a private company away from the scrutiny of Wall Street.

Thursday's special shareholders meeting, where the voting was to be completed, was quickly adjourned, signaling that Dell's camp lacks enough votes for its offer.

Icahn and investors agitating for an alternate plan would keep the company public, charging Dell's deal undervalues the computer maker and that they can extract more value for shareholders. Icahn has agitated to oust Michael Dell as CEO and entirely remake the board.

Icahn and Southeastern Asset Management issued a statement saying, "We believe that this delay reflects the unhappiness of Dell stockholders with the Michael Dell/Silver Lake offer, which we believe substantially undervalues the company."

Founder Dell and his company, sliding in rank as the world's No. 3 PC maker, face a PC market in steady decline and must race to find new business lines.

"Icahn has been out there selling his deal hard, and he's been raising the amount of questions about what investors are going to get from this deal, and that has translated to investors not supporting the deal," said IDC analyst Crawford Del Prete.

"The question is what is a fair price for Dell as the bedrock of its business is crumbling?" Del Prete says.

Founder Dell and investing partners Silver Lake Partners are offering to take the company private for $13.65 per share, or $24.4 billion. So far, billionaire investor Icahn, a vocal opponent of the proposal, has refused to drop his counteroffer.

Icahn and Southeastern Asset Management have bid $14 a share plus a warrant for every four shares to buy one Dell share for $20 in the next seven years. Icahn values his counteroffer at $15.50 to $18 a share. Both offers would add debt to Dell's balance sheet and require private-equity loans.

Dell shares closed Thursday at $13.12, up 24 cents.

On Tuesday, a special committee of Dell's board declined to endorse Icahn's latest proposal as superior. The committee rejected Icahn's financing terms, conditioned on replacing Dell's board with Icahn and 11 others who work for Icahn and Southeastern.

Icahn and Southeastern are reported to have a short list of picks to replace CEO Dell should they win the proxy skirmish. Those include Oracle President Mark Hurd and Hewlett-Packard's PC chief Todd Bradley, among others.

Reforming Dell as a public company — and addressing an ailing consumer PC business — is an uncertain path that most recently backfired for Hewlett-Packard under former CEO Leo Apotheker, cautions Del Prete.

"Look to HP for how a revolving-door management goes. Carl Icahn likes to say Michael Dell has had his chances. From the cheap seats it maybe looks that way. It was only when the train went off the tracks that Michael Dell got back into the business."