The Blackstone Group has abandoned its bid for Dell. That's good news for namesake founder and CEO Michael Dell, who's been jockeying to take the company private for months. But it might not bode well for the troubled firm. Blackstone had been inspecting Dell's books to decide whether it would offer $14.25 a share for control of a publicly traded Dell, said Andrew Ross Sorkin and Jeffrey Crane in The New York Times.

But in a letter to Dell's board, the private equity firm backed away from its offer, citing "an unprecedented" drop in PC volume that was "inconsistent with management's projections for modest industry growth."

So Blackstone may be out, but Carl Icahn — a shareholder who opposes the CEO's private buyout plans — is also considering a bid.

Icahn "is still a major player because he has a loud voice and owns 4.6 percent of the Dell shares," said Ronald Barusch in The Wall Street Journal. And yet, it's deemed "unlikely" that the company's board will accept Icahn's competing bid. Still, though, Michael Dell and his buyout partners will need "the vote of a majority of the Dell shares not owned by Mr. Dell's group to get past the finish line."

Dell's group has some options — it could raise its bid price or offer a stake of the private company to shareholders who oppose the buyout. But for now, the most attractive option is to simply press ahead for a vote. And "all signs point to this being a nail biter," Barusch says.

The full letter from Blackstone:

Boulder Acquisition Corp.
c/o Blackstone Management Partners L.L.C.

April 18, 2013

Special Committee of the Board of Directors of Dell Inc.
One Dell Way
Round Rock, Texas 78682
Attention: Alex Mandl, Presiding Director

Dear Alex,

I want to thank you, the Special Committee, and its advisors for inviting us into the process and for granting us due diligence access to Dell Inc. I also want to express our gratitude to Michael Dell and the management team for spending time with us and providing us with information and data relating to the business plan and financial forecasts of Dell.

You have asked for an update of our views after the intensive due diligence that we just completed. While we still believe that Dell is a leading global company with strong market positions, a number of significant adverse issues have surfaced since we submitted our letter proposal to you on March 22nd, including: (1) an unprecedented 14 percent market decline in PC volume in the first quarter of 2013, its steepest drop in history, and inconsistent with Management's projections for modest industry growth; and (2) the rapidly eroding financial profile of Dell. Since our bid submission, we learned that the company revised its operating income projections for the current year to $3.0 billion from $3.7 billion.

For the reasons set forth above, among other reasons, on behalf of Boulder Acquisition Corp., Blackstone Management Partners, Francisco Partners, Insight Venture Partners, and Riverwood Capital, I regret to inform you that we will likely not pursue this opportunity. I would welcome the opportunity to speak to you to follow up on these matters and answer any questions that you may have.



By: /S/
Name: Chinh Chu

cc: Roger Altman, Evercore Partners