Dell e-mail outlines shakeup
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Executive ranks will shrink; no bonuses for 2006.
By Dan Zehr
AMERICAN-STATESMAN STAFF
Saturday, February 03, 2007
Dell Inc. Chairman and CEO Michael Dell sent employees an e-mail Friday outlining the next steps in a major corporate shakeup and calling on them to help cut costs and reduce bureaucracy to restore the company to dominance in its industry.
The e-mail went to Dell employees just two days after Michael Dell replaced Chief Executive Officer Kevin Rollins, after 18 months of weakening performance and slowing growth.
In the message, Dell said the company would not give bonuses for 2006 but added that it would budget for "above-market raises" this year and readjust the targets for bonuses.
Despite hard work and sacrifices, "we had great efforts, but not great results," Dell wrote about how the company ended its fiscal year Friday. "This is disappointing, and it is unacceptable."
Dell also said that Paul Bell, who now runs operations in Europe, would become the top executive for the Americas, which accounts for two-thirds of the company's revenue.
Donald Carty, the new chief financial officer, also will have responsibility for human resources, investor relations, communications and technology systems.
It was unknown Friday evening how that would affect executives who held those positions, such as Vice President Lynn Tyson, who led the company's investor and public relations efforts.
The company is looking for a chief marketing officer, a new position, and Dell said the company will create a head of global operations to oversee its expanding manufacturing, design and customer service operations around the world.
Dell said he will streamline the executive ranks, reducing the number of top managers from more than 20 to 12.
He also said he will not hire a chief operating officer to help him run the company, as some Wall Street analysts had expected.
"I plan to be CEO for the next several years," he said.
Dell said the company will push faster product development and branch out into new businesses to drive revenue growth.
The global services business is one of the company's fastest-growing divisions, with revenues expected to top $5 billion — almost 10 percent of the total.
In that area, Dell said, "we will build, partner and buy," raising the possibility of acquisitions — a rare event at the company.
The company's revenue and computer-shipment growth have slowed dramatically over the past 18 months, allowing top rival Hewlett-Packard Co. to overtake it as the world's largest computer maker.
Analysts have said a mundane product line is partly to blame for the company's struggles, especially in the consumer market, which has fueled industry growth in the past 18 months.
In that arena, the company faces intensifying price competition and suffers because it does not sell its computers in retail stores.
Dell made no mention of changing the pure direct sales model but said, "We will not run away from a cost fight!"
"I ask you to commit with me to the future of Dell," the founder, chairman and now CEO wrote. "Show confidence with your teams and our customers. We will fix this business and take it to new heights."
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