Biggest Dell Holder Has High Opinion of Value: Chart of the Day

Dell Inc.’s biggest outside shareholder sees far more value in the world’s third-largest maker of personal computers than others do.

Southeastern Asset Management Inc. said in a letter to Dell’s board last week that the company is worth at least $24 a share. The estimate followed a $24.4 billion buyout offer from Michael Dell, the company’s founder and chief executive, and Silver Lake Management LLC, a private-equity firm.

As the CHART OF THE DAY illustrates, the value that the Memphis, Tennessee-based firm sees in Dell is higher than the stock’s price since September 2008. It’s also well above three other per-share figures associated with the proposed buyout:

-- $13.65 a share, the value of the offer made by Michael Dell and Silver Lake. Dell’s stock closed above that price for the past two days. The performance raises the possibility of a higher bid for the company, based in the Austin, Texas, suburb of Round Rock.

-- $15 a share, an estimate of how high the offer may be raised. Peter Misek, an analyst at Jefferies & Co. in New York, cited the figure in a report yesterday. Misek derived the price from projected returns on the deal. At $17 a share or more, the returns would be too low for the buyout to proceed, he wrote.

-- $16.38 a share, an estimate of Dell’s value by Aswath Damodaran, a finance professor at New York University who has written books on valuation. Damodaran cited the figure in a posting yesterday on his Musings on Markets blog.

T. Rowe Price Group Inc., Dell’s second-largest outside investor, came out against the deal yesterday in a statement that said the buyout offer was too low. The Baltimore-based firm didn’t disclose its estimate of the company’s value.

To contact the reporter on this story: David Wilson in New York at dwilson@bloomberg.net

To contact the editor responsible for this story: Chris Nagi at chrisnagi@bloomberg.net