Michael Dell and Silver Lake contend the company will be in a better position to overhaul its operations as a privately held company. That's because Dell would be able to make dramatic changes without having to worry about Wall Street's fixation on whether earnings and revenue are growing from one quarter to the next.
The proposed sale at $13.65 per share is 25 percent above where Dell's stock stood last month, before word of the buyout negotiations leaked out in the media. Dell's stock has plunged during the past year as PC sales have slumped amid the technological upheaval caused by the growing popularity of smartphones and tablet computers.
Dell's shares rose 10 cents Friday to close at $13.63.
Michael Dell has been trying to wean his company from PCs by expanding sales of technology consulting services, business software and higher-end computers. As part of that process, Hawkins pointed out that Dell has spent $13.7 billion, or the equivalent of $7.58 per share, on acquisitions since Michael Dell returned as the company's CEO in January 2007. Dell hasn't taken any charges to reflect that the acquisitions have diminished in value.
In his letter Hawkins laid out his rationale for valuing the company's PC business at $2.78 per share and other product lines at a combined $13.36 per share. With those two components, added to the $7.58 per share in acquisitions, Hawkins arrives at his $23.72 per share valuation.
Instead of sticking with the current deal, Dell's board should consider an alternative that would give existing shareholders a stake in a restructured company that would still be led by Michael Dell, Hawkins wrote.
Messages left with Southeastern for comment weren't immediately returned.
The 38-year-old firm, which is based in Memphis, Tenn., manages about $33 billion in assets. In a regulatory filing Friday, Southeastern said it had spent about $2.28 billion to accumulate more than 147 million shares of Dell. That means Southeastern would lose about $270 million on its Dell holdings if the company is sold at $13.65 per share.