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Fri, Feb 02, 2007 - Page 10 News List

Michael Dell returns to the helm

BATTERED Last year Dell lost its No. 1 position to rival Hewlett-Packard Co, which extended its lead in a worldwide tally of PC sales for the second quarter in a row


Dell Inc, battered by battery recalls and disappointing earnings, said that chairman Michael Dell will return to run the company he had built into one of the world's largest makers of personal computers.

Dell's appointment is effective immediately. He replaces Kevin Rollins, who also resigned as a member of the board.

Dell shares, which fell US$0.07 to close on Wednesday at US$24.22 on the NASDAQ, jumped US$0.92, or 3.7 percent, in after hours activity.

During Rollins' tenure, Dell was battered by a recall of 4.1 million potentially flammable notebook batteries made by Sony Corp and by disappointing earnings. The company on Wednesday forecast fourth-quarter profit and sales below analysts' consensus estimates of US$0.32 per share on sales of US$15.3 billion.

The company's accounting practices also are the subject of federal scrutiny. The US attorney for the Southern District of New York has subpoenaed documents related to Dell's financial reporting from 2002 to the present.

Dell, 41, has served as chairman since founding the company in 1984 and was chief executive officer (CEO) until 2004, when he hand-picked Rollins as his successor. Dell defended the beleaguered executive in September, saying Rollins was not solely responsible for the company's recent missteps.

Rollins joined Dell in 1996 and had a variety of roles before becoming CEO, including chief operating officer, vice chairman and president of Dell Americas. Before Dell, he was vice president and partner of Bain & Co management consultants.

"Kevin has been a great business partner and friend," Dell said in a statement on Wednesday.

"He has made significant contributions to our business over the past 10 years. I wish him much success in the future," he added.

Dell's direct sales model, which allows businesses and consumers to buy equipment directly from Dell, turned the company into a leading computer manufacturer and a Wall Street juggernaut with one successful earnings announcement after another.

But in recent years Dell has been stung by a glut of low-cost, low-profit PCs and weaker than anticipated sales of pricier, more lucrative desktops and notebooks.

Just last year Dell lost its No. 1 position in the industry to rival Hewlett-Packard (HP) Co.

Recent reports from IDC and Gartner Inc showed HP outgrowing the rest of the PC market and extending its lead over Dell in a worldwide tally of PC sales for the second quarter in a row.

HP's sales jumped 24 percent in the fourth quarter -- its best such period since 2000 -- while Dell's sales dropped about 9 percent. The shift left HP with 17 percent to 18 percent of the worldwide market in the fourth quarter, to Dell's 14 percent to 15 percent.

Dell has been trying to orchestrate a turnaround effort for several months now. Called "Dell 2.0," the plan seeks to improve customer service to help it compete with rivals.

The accounting probe, meanwhile, remains unresolved.

Dell's earnings statements from the second and third quarters have yet to be filed with the Securities and Exchange Commission amid the ongoing probe. Last week, Dell said it would supply NASDAQ with the reports, along with any restated financial documents, by March 14.

Analysts were generally surprised by the announcement but expressed hope that Michael Dell's return would reinvigorate the faltering company.

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