What Does Carl Icahn See in Dell?

At first Dell DELL had only one suitor – company founder, Michael Dell who, along with Silver Lake Partners says he plans to take the company private and has offered $13.65 a share.

Then, according to The New York Times, Blackstone Group BX, Francisco Partners, and Insight Venture Partners, entered the discussion with an offer of $14.25. At this point, things were starting to get interesting.

Apparently, playing in the Herbalife HLF sandbox isn't as fun as it used to be becausenow, well-known activist investor, Carl Icahn has skin in the game. Icahn who, according to The Wall Street Journal, also disclosed a 4.6 percent stake in Dell, is offering a $5 billion equity commitment. The offer includes $15 per share, thereby upping the stakes for both Michael Dell and Blackstone.

Here’s the problem: Dell may not be all that great of a deal.

Back in the day (the early 2000s), the company was considered to be a model of innovation. It pioneered online ordering of custom-made PCs while still keeping prices low.

Fast forward to Q4, 2012. Dell’s slice of the PC market pie slipped to a little more than 10 percent – down from 12.5 percent in 2011. Shipments fell 20 percent, according to research house IDC.

Although Michael Dell returned as CEO in 2007, he has not been able to orchestrate a turnaround so far. The company’s focus on corporate computing has not yet yielded hoped for results.

Reuters reported a source that said Dell slashed its internal forecast for fiscal 2013 operating profit to $3 billion - down from the $3.7 billion it had predicted previously. The source also indicated that additional details would be revealed in a proxy filing expected by the end of this week.

So, why is Carl Icahn interested? What does he see that others do not?

Icahn has bought into technology in the past, according to the Financial Times. He invested in Yahoo! YHOO, when he was unable to talk Microsoft MSFT into buying it. But, having done something in past is not necessarily a reason to do it again.

Icahn opposed the original Dell buyout, saying it undervalued the company. As a result he has pushed for a special dividend to shareholders of $9 a share and more leverage, according to ZDNet.

ZDNet believes Icahn's proposal might damage Dell as a serious technology player due to the uncertainty brought on by the move. The website says Icahn won’t care. As long as he gets his $9 dividend.

In early trading, Monday, Dell is up more than 3 percent at $14.58.