CEO: Public Dell would be slow and laden with risk and debt

Michael Dell hits back in verbal dust-up with rival bidder

Michael Dell has thrown his own verbal grenade in the war of words over his company's future by penning an open letter claiming keeping the firm publicly owned would make its transformation "more difficult, slower and riskier".

The eponymous leader (pictured) of the PC maker used an SEC filing to reiterate his belief that the best environment in which to execute his intended transformation of the company would be to return it to private ownership. He added that a leveraged recapitalisation, as proposed by rival bidder Carl Icahn, would saddle the company with unhealthy levels of debt, create volatility in its stock performance and damage the perception of Dell with customers and employees.

"Full implementation of the steps needed to position the company for the long term is likely to have an even greater negative impact on earnings in the near term than what we have already seen," writes Michael Dell. "Accomplishing Dell's transformation is more challenging as a public company. Taking these actions as a public company could continue to adversely affect Dell's stock price."

The missive adds that margin erosion in the PC and server markets is liable to get even worse than it already is, while pointing out that Dell has lost ground in the storage space since its reseller relationship with EMC was brought to an end. In the networking space, the market is likely to be disrupted by the emergence of software-defined networking, claimed Dell.

The company founder labels Icahn's proposal of a leveraged recapitalisation "imprudent". The letter claims that such a deal will create worrying levels of debt, risk and uncertainty.

"Adding substantial debt to the Company while leaving it as a public company would decrease the company's financial flexibility and hurt the company's ability to weather an economic or business downturn," writes Dell. "It would also jeopardise customer perception and employee retention.

"None of the Company's public company peers attempts to operate at, or even near, the high levels of debt that a leveraged recapitalisation would create. A leveraged recapitalisation would leave the company as a widely held public company, with all of the issues that make it more difficult, slower and riskier to accomplish the company's necessary transformation."