NEW YORK - The special committee set up by Dell (IW 500/20) to evaluate options for the troubled computer giant warned Friday of "substantial downside risk" if shareholders reject a buyout plan led by founder Michael Dell.

In a document filed with U.S. regulators, the Dell panel said the personal computer business appears even bleaker than earlier forecasts, and that Dell still relies on the PC segment for two-thirds of its revenues.

The filing comes ahead of a July 18 shareholder vote on a $24.4 billion buyout plan, which would take Dell private and allow Michael Dell to restructure the company without the pressures of a publicly traded firm.

ISS Recommendation is Key

But some news reports said Michael Dell, who is backed by the private equity firm Silver Lake, was being pressured to raise his offer to be able to win backing from a majority of shareholders. One key for the vote will be the recommendation of ISS, a proxy advisory firm.

Corporate raider Carl Icahn and his investor allies have called the buyout plan a "giveaway" and are pressing for an alternative plan that could keep Dell public, with an injection of cash in a so-called "leveraged recapitalization."

The document filed with the Securities and Exchange Commission said, however, that Dell's planned turnaround is at risk because of trends in the PC business, and it cited a Morgan Stanley report that said global PC sales will sink 10% this year, far worse than earlier forecasts.

"PC exposure will likely continue to weigh on Dell's share price, regardless of the enterprise trajectory," the document said.

It also said Icahn's valuation for the company is based on "unrealistic" assumptions, citing Hewlett-Packard (IW 500/7) for comparison.

Using the price-to-earnings ratio of HP, the panel said Dell could be valued at between $5.85 and $8.67 per share, compared with $13.65 under the private equity plan.

The document included a chart with these figures, with a headline stating, "Substantial downside risk to Dell shareholders if transaction rejected."

The New York Times reported this week that the special committee is worried the buyout offer will fail to win a majority of Dell shares. The Dow Jones news site AllThingsD said some at Dell fear a rejection could create a chaotic situation at the former No. 1 PC maker.