Will Carl Icahn bid for Dell?

Shares of Dell (DELL) are trading higher in early Monday trading after Carl Icahn announced that he had entered a confidentiality agreement with the computer maker to look at its books, raising the possibility that the billionaire activist investor may make a bid for the company.

Icahn, who is pressuring Round Rock, Texas-based Dell to pay a special $15.7 billion dividend, has argued that CEO Michael Dell's $24.4 billion leveraged buyout that's being done in conjunction with Silver Lake Management undervalues the company. Icahn's view is backed by two other major Dell shareholders, T. Rowe Price (TROW) and Southeastern Asset Management. Icahn's interest in Dell has been welcomed -- at least officially -- by a special committee of Dell's board that's seeking competing offers for the company.

The cantankerous billionaire didn't provide many details regarding his plans in his two-sentence press release. In the past, however, Icahn has shown more interest in stirring up companies rather than actually running them. David Faber of CNBC said Icahn might offer some sort of plan to refinance Dell's debt that would lead to the special dividend he wants. Icahn earlier vowed to engage Dell in "years of litigation" if it didn't yield to his plan.

Ironically, Michael Dell may have hurt his case for the leveraged buyout because his strategy to turn around the company he founded more than 20 years ago seems to be starting to work. Dell's fourth-quarter earnings weren't as bad as Wall Street had feared. though they weren't that great, either. Net income fell 31%, and revenue dropped 11% in the period.

Dell, though, has few other options. Hewlett-Packard (HPQ +0.63%) and Lenovo, the Chinese computer maker, have both decided not to join the fray for Dell, according to The Wall Street Journal. Dell's road ahead is difficult even under the most optimistic of scenarios.

Icahn no longer manages money for clients, so he can do what he wants with his fortune, when he wants. Ever the multitasker, Icahn is also busy with fights regarding Herbalife (HLF) and Transocean (RIG).

Even when he doesn't get his way, Icahn is rarely dull, and for investors he's worth watching -- but not necessarily following.

Jonathan Berr doesn't own shares of the listed stocks. Follow him on Twitter @jdberr.

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