May 10, 2013 · 2 minutes

The prospect of Michael Dell remaining CEO of the company he founded 29 years ago has gone from bad to worse. All because of Carl Icahn and his little stub.

The saga of Dell, which has been playing out for years, has been gathering steam in recent months. Several years ago, Michael Dell took back the reins of the company he founded and built into a PC giant. The market for desktops and laptops was slowing, so he made a bold push into IT services and enterprise software. It sort of worked, but PCs remained a heavy albatross around Dell's neck.

After Dell moved to take his company private, activist investor Carl Icahn saw an opportunity. After a few dramatic if complicated turns of events and a good deal of activist-investor kabuki on Icahn's part, it became clear that Icahn was staging a shrewd coup to take Dell out of its founder's control. Any doubts that that was the inevitable outcome vanished this morning when Icahn filed a letter to Dell shareholders with the SEC.

Icahn called Dell's leveraged buyout bid of $13.65 a share in cash “the great giveaway.” Instead, Icahn would join with Southeastern Asset Management – which together with Icahn owns 13 percent of Dell – to raise $5.2 billion in debt, add it to cash on hand and let shareholders keep shares in the company worth $1.65 – what Icahn called a “stub” share – plus $12 a share in either cash or shares in the new Dell.

Icahn then took to the airwaves to try and throw Michael Dell under the bus. And he did it with typical Icahn panache, praising Michael Dell and the company's current board even as he tried to bury them. He told Bloomberg television,

We think it’s very important you have a new CEO there. We would want a new CEO, who the board would select... We don’t micromanage, but we need a bit of a cultural change at Dell. Michael Dell, I just think he’s not the guy for that at this point. And I”m not saying this alone. I have nothing against Michael Dell, I have respect for him. I respect how he’s got the board to give him this bargain! I’ve never met him. I certainly think he’s a smart guy. I don’t think he’d be the one to run the company. I’m sure of that. The board would be completely out. I have nothing against the board.
Even though Icahn's deal is valued at the same $13.65 a share as Dell's proposed buyout, may appeal to investors because it offers the flexibility to maintain shares in the company. If Dell went private and turned things around, he could take the company public again at a profit. Some investors were concerned that Dell's offer was too low and wanted to hold some of the stock if the company turned around. Icahn's offer gives them that option.

But nobody understands Dell, its problems and prospects better than its founder. Much like many startup founders, Dell is succumbing to investor pressure to pack his bags and go home. He never wanted it this way, but Michael Dell is suffering from founder's syndrome, writ large. Instead of VC investors elbowing him out, it's activist investors. But it's a lesson for all founders: Even after three decades, you're never safe from being ousted from the company you built and still love.