Dell reclaims CEO title; Rollins resigns
statesman.com
Shareholders had been clamoring for change at the struggling technology company.
By Dan Zehr
AMERICAN-STATESMAN STAFF
Wednesday, January 31, 2007
Michael Dell will replace Kevin Rollins as chief executive officer at Dell Inc., a change that many shareholders and analysts had clamored for but few had expected at this time.
Dell will remain chairman and Rollins has resigned, the company said Wednesday.
"The board believes that Michael's vision and leadership are critical to building Dell's leadership in the technology industry for the long term," Samuel Nunn, the presiding director of Dell's board, said in a news release.
The computer maker has languished since Rollins became CEO on July 16, 2004. The company's shares have lost nearly a third of their value since his promotion from chief operating officer.
The shares were up about 5 percent in after-hours trading today following the CEO announcement.
In addition to its financial challenges, the company is under investigation by the Securities and Exchange Commission and the U.S. Attorney for the Southern District of New York, which are looking into its financial record-keeping as far back as 2002.
Rollins' departure is by far the biggest change in a broad shake-up in both the top executive ranks and the business as a whole.
Neither Dell nor Rollins were immediately available for comment.
On Monday, Rollins was in New York to represent Dell Inc. as Microsoft Corp. debuted the consumer version of its Vista operating system.
But Rollins' profile on Dell's Web site had been removed by 4 p.m. today, within a half-hour of the announcement of the CEO change.
Rollins had worked closely with Dell in what the company called a "two-in-the-box" strategy for leading the business. In the past, both have spoken about the tight partnership they shared in running the company. Their offices are separated by a glass wall and a door that reportedly almost always remains open.
"I don't think there's an ounce of light between us," Rollins said last year in response to some employees' criticism that there were two Dells, one Michael's and one his.
"There are not two Dells," he said at the time. "Michael and I make every decision together. We don't do anything in the company that he and I are not fully locked in to."
Dell often said much the same. In defending Rollins' performance last summer, he said he deserved as much blame for the company's struggles as his CEO did.
"Kevin has been a great business partner and friend," Dell said in Wednesday's news release. "He has made significant contributions to our business over the past 10 years. I wish him much success in the future."
Rollins joined Dell in April 1996 after working with the company for several years as a consultant with Bain & Co.
After becoming chief operating officer in 2001, he and Dell led the company through an explosive period of growth — annual revenue almost doubled from $31.2 billion in fiscal 2002 to what's expected to be almost $60 billion in fiscal 2007, which ends this week.
But with the company facing one of the toughest periods in its 24-year history, Dell is shaking things up. Three of the company's highest-ranking, longest-serving executives have left in the past four months, including Chief Financial Officer Jim Schneider.
It has brought in new executives from outside the company and has reorganized its business by type of customer rather than type of product.
"Dell has tremendous opportunities ahead of it," Michael Dell said in a news release.
Any drive to take advantage of those opportunities will come from a position behind its top rival, Hewlett-Packard Co., which has displaced Dell as the largest manufacturer of computers worldwide. Just three years ago, H-P was struggling and Dell was gobbling up market share and reaping a profit margin that outpaced the rest of the industry by two times or more.
H-P fired then-CEO Carly Fiorina, replacing her with Mark Hurd in March 2005. Since Hurd has joined the company, it has cut much of its fat and made itself more profitable, and it also has generated faster sales growth than Dell's.
H-P shares have more than doubled since Hurd replaced Fiorina.
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