Not that he actually ever left, but as of today, founder and Chairman Michael Dell, following the resignation of Kevin Rollins, will assume the position of Chief Executive and dive back into the day-to-day operations at Dell Inc. ("Dell"). Insiders and stockholders are hoping Mr. Dell, with his oozing charisma and vision, can usher in a new era, helping breath fresh life into a company that had sales of $56 billion in fiscal 2006.
Speculation of Mr. Rollins ouster has been in the air for months. Throughout his tenure Mr. Rollins did prove to be a valuable asset, most notably devising a marketing strategy that created separate units to target Dell’s separate markets (healthcare, big business, etc.), helping Dell achieve dominance in the 90’s. But every dog has his day and after the 2006 embarrassments (atomic laptop batteries, HP surpassing Dell in PC sales, missed growth in laptops etc.) combined with semi-flopped growth ideas (one of which was Mr. Rollins strategy to utilize Dell’s lean-mean-fighting machine of a supply chain and powerful Brand to expand into consumer electronics) combined with a flagging stock price for the better part of a decade proved to be enough for Mr. Dell to show Mr. Rollins the door.
Mr. Dell is back and that’s great but the question still remains: Can Michael Dell teach his 23 year old baby new tricks? Acting as chairman Mr. Dell did negotiate and close on the acquisition of Alienware last year, a smart move up market (this won’t make a dent in sales, but it will help margins a bit and give increased efficiency to Alienware, which I may add was badly needed). Mr. Dell also had input on the roll out of Dell’s XPS line of computers, another move up market in search of higher margins. I bet Mr. Dell probably had something to do with Dell's decision to finally carry AMD based machines. That’s one huge party Dell arrived super late too, being all gung-ho about their monogamous relationship with Intel (ooops!). Mr. Dell also believes there are still a ton of efficiencies to be wrung out of their direct-to-consumer business model. Whatever ushering in Mr. Dell does, I do wish him and his crew the best of luck. Dell is still a giant in the commoditized market of PC’s. On one hand, growth prospects are still very attractive internationally (think BRIC), although competition with the likes of Lenovo, HP and Acer (wait, did someone say Acer?) will continue to be brutal. On the other hand, driving growth inside America will prove extremely difficult considering the degree of PC saturation, but hopefully increased efficiencies and new product offerings will help deliver this needed growth at home.
Michael Dell is back. And at this point all we can do is wait and see...
openSermo extras - Interesting things on February 1st.
(Disclosure: Ethan Bloch has no affiliation, nor does he posses any material investment (ex. Common stock) with Dell Inc.)
Update: It seems as though this so called monogamous relationship between Dell and Intel wasn't so legit. It has recently been reported that Dell was receiving what amounted to billions of dollars a year in rebates from Intel to stay away from AMD. Shareholders have filed for class action status against Dell for misreporting these rebates in what they allege was illegal and for lying about the condition of operations as insiders sold off billions in stock.
