Will Dell Be A Comeback Kid?
By Maria Bartiromo
After pushing out Kevin Rollins as CEO and grabbing the reins of Dell Inc. himself, Michael Dell has set about reviving the fortunes of the company he founded. He hired former AMR (AMR ) CEO Don Carty as CFO, and he has now brought in Solectron CEO Michael Cannon as president of global operations. Will Dell be a comeback kid?
You are taking back the company as CEO. How does it feel?
It's very exciting. I am 41 years old...and I believe there is a whole lot we can do. I have outlined some near-term priorities. We are looking to expand services. We are likely to do more internationally. We are looking at the next billion PC users [in emerging markets]. In about five or six weeks, I'll be in China to launch a special new product that appeals to the inexperienced PC user.
What can you do that your last CEO couldn't do?
Kevin [Rollins] was with the company for 10 years, and during that time, it grew from $5 billion in revenues to $57 billion. I was CEO for most of that time, and he was CEO for 2 1/2 years. I don't want to minimize his contributions because he did a lot and he is still a friend, but it was time to make a change.
What went wrong with Dell?
In the fourth quarter of last year, in the consumer market in particular, we lost share, and I think it's due to a number of factors. There are things we can address in terms of product innovation...and the customer experience. There has been huge growth in international markets, some of which we haven't been participating in much. Dell has been skewed to the U.S. in a big way, and knowledgeable computer customers were reluctant to buy right before the Vista upgrade.
What is the right revenue growth people should expect?
It will take about 18 months to effect the changes...but we are not providing guidance on growth or profitability.
Do you have to make a big acquisition to participate in the growth overseas?
[With new factories in China,] Brazil, Poland, Russia, and Central Europe, we don't have to do a big acquisition. But that doesn't mean we won't consider one.
What about printers? You said you'd make a big splash and go against Hewlett-Packard (HPQ ), and, frankly, you haven't done well.
We have built a little more than a $1 billion printer business, which is pretty good.... We can continue to grow.
Dell was hit by a big lawsuit from [plaintiffs' attorney] Bill Lerach's firm alleging that Dell executives sold off $3.3 billion in stock before the company began its slide in 2005. Lerach calls it the worst case of "dump and run" he has seen, both in terms of the size of the stock sales and the fact that many top execs sold more than 90% of their Dell holdings [Rollins sold over 95%, and Dell sold 27%]. How do you respond?
We don't comment on pending litigation.
A key Lerach claim is that Dell headed south after it stopped getting a $250 million-a-quarter payment from Intel (INTC ) for exclusively sticking with its chips. The suit claims Dell deceived shareholders by not disclosing these payments and using them to prop up the story that the direct-sales engine was still in great working order.
Again, I can't comment, but I will say that it's in the company's best interest to negotiate the best terms with suppliers, and that is something any company would do.
Dell is in the penalty box with investors right now. For how long?
It took us some time to get into these challenges, and it will take us some time to get out. I think we have some tough decisions and some tough quarters ahead.
Earlier you said 18 months.
I think 18 months is a good timeline to think about.
Did you wait too long to come back?
I am not sure.
Maria Bartiromo is the anchor of CNBC's Closing Bell