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Dell Buyout Marks Fork In Restructuring Road

Tickers in this article: BBRY BMC DELL HPQ NOK

Updated to reflect closing share prices and additional share price data.

NEW YORK (TheStreet) -- Investors bracing for an end to Dell's winding road to an eventual takeover may want to focus less on bid price and more on the PC-maker's future following a deal.

Dell's eventual sale through a takeover, leveraged re-capitalization or breakup may foretell a more pressing story about how its new owners might resuscitate the Austin, Texas-based computer maker and whether others in the industry can follow suit. The company Michael Dell so famously created in his university dorm room has struggled mightily to forge a presence in mobile, cloud software and big data revolutions.

Regardless of Dell's future structure, the list of companies ahead for which it must play catch-up is formidable: Apple , IBM , Samsung, Amazon and Salesforce.com .

The same could be said of other technology companies trying to regain past glory. That list is also a long one: Hewlett-Packard , BlackBerry and Nokia as well as struggling services providers BMC Software and Compuware .

The crucial question for an underperformer like Dell is whether it can execute turnaround strategies formulated years ago, or decide that there's more value to shareholders by restructuring and selling assets.

The drive to buy Dell pits private equity investors Silver Lake, Blackstone Group and corporate agitator Carl Icahn against each other. An independent board committee is weighing which among the three proposals to recommend to shareholders.

Depending on how Dell's committee and its shareholders decide, the company's takeover may prove whether private equity firms can use distance from public markets to re-position tech laggards. The alternative may be breakup artists such as Carl Icahn.

Dell closed down 5 cents to $14.25 Tuesday trading, matching the offer price of the Blackstone Group's takeover proposal. Shares have gained 40% this year as takeover interest has increased though the stock remains more than 14% below year-ago levels.

Consider two of the most successful tech investments made by Dell's current crop of bidders: Silver Lake's $1.9 billion acquisition of Skype, and Icahn's campaign to breakup Motorola .

In the case of Skype, a forced marriage between it and eBay led to key management departures, bad strategy and unit underperformance. In 2009, Silver Lake came in with an investor group that included Andreessen Horowitz and Skype Founder Niklas Zennström for a 65% stake in the deteriorating business.

In buying the controlling stake, Silver Lake brought back a key player to improve Skype's performance and untangle mixed synergies with eBay's online auction markets. The deal also resolved bad blood between Skype and its parent, eBay.

Those moves and some operational change helped Silver Lake increase Skype's value to its eventual acquirer Microsoft, said Egon Durban, a Silver Lake managing director at a Dow Jones private equity conference in October 2011.

Silver Lake recorded a 300% gain on Skype when the company was sold in May 2011 to Microsoft for $8.5 billion.

The success of the 18-month investment, according to Durban, was removing Skype from a poorly conceived partnership with eBay, bringing back management that helped found the company and refocusing on consumer usage of the VOIP provider. Durban is now running Silver Lake's bid for Dell.

In the case of Icahn and his $3.5 billion investment in Motorola, activism in the form of breakups and asset sales salvaged a moderate payoff in the mobile-phone pioneer. Motorola certain benefited. Nokia and BlackBerry by comparison have lost over 50% of their market value.

After years of battle, Icahn relented in his activist campaign and the company was split into Motorola Solutions, a communications services giant, and Motorola Mobility, a leader in the cell phone and cable set-top boxes market. Even after the Jan., 2011 split, Icahn apparently remained in the red on his Motorola investment until the company sold the handset unit Motorola Mobility to Google for $12.5 billion in 2011, a deal aimed at protecting the company's Android ecosystem from litigation.

When Motorola Solutions repurchased Icahn's remaining $1.17 billion stake in the company in late-2011, Icahn appears to have solidified at least a modest profit on Motorola. In hindsight, that's impressive when compared to the struggles of competitors like Nokia.