Michael Dell Honored by Peers
Thursday July 19 3:23 AM ET
By CONNIE MABIN, AP Business Writer
<<AUSTIN (AP) - A few years ago, Dell Computer Corp.'s (NasdaqNM:DELL - news) sales and stocks were soaring, but since the nation's economy began slowing last year, so too has the company.
The personal-computer maker has touched off a brutal price-cutting war, it has eliminated more than 5,000 jobs, and its stock price tumbled 66 percent last year.
So it came as a surprise to founder Michael Dell when he learned that fellow chief executives had chosen him as Chief Executive magazine's CEO of the Year. The award will be presented Thursday night in New York.
``It probably would have been easier to give me the award when our business was doubling in size every year and our stock went up hundreds of percent per year,'' Dell said in an interview Wednesday. ``But it's probably even more meaningful to get it in what is a challenging year for the whole industry and for the whole economy.''
John Brandt, editor of Chief Executive, said short-term financial performance isn't necessarily the biggest factor in winning the CEO of the Year award. Finalists are nominated by the magazine's CEO readers, then a panel of judges made up of corporate leaders and the previous year's honoree selects a winner.
``This really takes a look at the CEO's ability to be a leader, to innovate and figure out new ways to create value,'' Brandt said. ``Judges seem to take a particular note of an individual's character, and we have a winner this year in Michael Dell who I think embodies all those things.''
Dell, 36, is the youngest executive to win the award, which has also been given to Intel's Andy Grove and Microsoft's Bill Gates (news - web sites).
Dell had a $1,000 bankroll when he started the company in his dormitory room at the University of Texas at Austin. He dropped out of school to focus on the business.
The Round Rock-based company grew by selling directly to customers, at prices below those of rivals who sold their PCs in stores. In the last four quarters, annual revenue reached $32.6 billion, but slowing growth led to the first large-scale layoffs in the company's history this spring.
Dell said the company didn't anticipate the short downturn in the economy and the tech sector.
``It has taught us some lessons,'' Dell said. ``The correction has been pretty rapid, and you know that's something that's sort of a challenge to manage. We probably should have seen at least some of the excess as pure excess and dealt with it kind of differently.''
Dell remains optimistic, preferring to talk about the company's position atop the PC-making industry. The company continues to gain market share, with first-quarter shipments up more than four times the industry rate.
``Essentially all of our competitors have gone into a loss, where Dell has maintained pretty reasonable profitability - certainly not what it was during the sort of peak up-cycle, but we're still nicely profitable,'' Dell said.
Apple Computer Inc. (NasdaqNM:AAPL - news) on Tuesday posted a 70 percent drop in third-quarter profits. Compaq Computer Corp. (NYSE:CPQ - news) revealed last week its revenues would fall 7 percent short of predictions for the second quarter and it plans to lay off 8,500 during the year.
Gateway Inc. (NYSE:GTW - news) saw its stock - and top executives - tumble. Shares plunged from $72 in 2000 to below $16.
Dell made most of its fortune selling PCs directly to customers, and said he envisions applying the direct business model to other areas.
``Certainly servers and storage have been a huge part of our growth and that continues. I think you'll see us going to the networking area with the same business model. You see us take this into new geographies,'' he said.
On Wednesday, the company announced it was expanding its networking business by selling network switches to small and medium businesses beginning in September. Switches send information from a server or desktop directly to another computer as opposed to the entire network.>> |
