Dell Ousts Rollins, Returns to CEO Role

Michael Dell, founder and chairman, returns to CEO role at Dell; warns of 4Q shortfall

(Dallas) Dell Inc., battered by battery recalls and disappointing earnings, said Wednesday 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 7 cents to close earlier Wednesday at $24.22 on the Nasdaq Stock Market, jumped 98 cents, or 4 percent, in aftermarket 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 32 cents per share on sales of $15.30 billion.

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

Dell has served as chairman since founding the company in 1984 and was chief executive until 2004, when he hand-picked Rollins as his successor. Dell defended the beleaguered executive in September, saying Rollins wasn't 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. "He has made significant contributions to our business over the past 10 years. I wish him much success in the future."

Dell's direct sales model, which allows business 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 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.


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