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Last updated: February 1, 2007 1:44 am
Michael Dell resumed full managerial control over the company he founded on Wednesday, replacing Kevin Rollins as chief executive of the world’s second-biggest PC maker.
The company also warned on Wednesday that it expected fourth-quarter revenues and earnings to be below the consensus expectations of analysts. Wall Street expects earnings of 32 cents per share on sales of $15.3bn.
Dell shares rose nearly 5 per cent in after-hours trading to $25.35 after it said Mr Rollins had resigned as CEO and as a member of the board of directors.
Dell has seen its sales growth and margins plummet and suffered loss of market share as competitors imitated its supply chain efficiencies and eroded its cost advantages.
“There is no better person in the world to run Dell at this time than the man who created the direct model and who has built this company over the last 23 years,” said Samuel Nunn, presiding director of Dell’s board.
Michael Dell founded his company with $1,000 at the age of 19 in his dormitory room at the University of Texas. He assembled computers and sold them direct to customers, creating a business that generates nearly $60bn in revenues a year and employs 79,000 people around the world.
He expressed confidence in Mr Rollins’ leadership in September but declined to comment in a Financial Times interview on the specific reasons for his departure. “Now it’s time to unify the leadership and focus on the future of the company,” he said.
“Chairman and CEO is the same job I had for 20 years. I think you are going to see a number of changes in streamlining the organisation, focusing the strategy and aligning it in a much more simplified way to drive execution and accountability and eliminate some redundancies in order to drive the business.”
Mr Dell probably shared as much responsibility as Mr Rollins for the company’s failings of the past two years, said Roger Kay, an analyst at Endpoint Associates.
“The rules of Wall Street demand that there be human sacrifice,” he said. “He’s got to examine the model from the ground up, to see what is working and what isn’t.”
Mr Rollins had joined from Bain & Co, the management consultants, and served as president and chief operating officer, vice-chairman, and president of Dell Americas before becoming chief executive in July 2004.
He helped create an industry leader that at its peak threatened to make major inroads with its successful PC model in the consumer electronics industry. By the fourth quarter, it was defending its share in its core market as HP advanced to 17-18 per cent of the worldwide market, compared with Dell’s 14-15 per cent, according to Gartner and IDC.
“Kevin has been a great business partner and friend. He has made significant contributions to our business over the past 10 years,” Mr Dell said in a statement on Wednesday.
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