Michael Dell reclaims Dell CEO throne, Dell 2.0 begins

Summary:Michael Dell is CEO again of his namesake company.  Kevin Rollins is out.

Michael Dell is CEO again of his namesake company. 

Kevin Rollins is out. 

Why? The company is going to have another earnings miss. 

Dell said it "expects its fourth quarter fiscal year 2007 results to be below the average of First Call estimates for both revenue and earnings per share."

According to Thomson Financial, Dell is projected to report fourth quarter revenue of $15.3 billion and earnings of 32 cents a share. For the year, Dell is expected to report revenue of $58 billion and earnings of $1.17 a share. 

The company just said in a statement:

"The Board believes that Michael's vision and leadership are critical to building Dell's leadership in the technology industry for the long term," said Samuel A. Nunn, presiding director of Dell's Board. "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."

The move isn't entirely unexpected. Dell has lost its luster in recent years as rivals such as Hewlett-Packard closed the manufacturing efficiency gap that propelled Dell throughout the 1990s.

On Rollins' watch Dell:

  • Misplayed a move to AMD chips (it took on AMD as a supplier just as Intel was rebounding);
  • Suffered through an SEC probe that's ongoing;
  • And regularly missed Wall Street estimates.  

Now it's Michael Dell job to mop up. He said: 

"Dell has tremendous opportunities ahead of it. I am enthusiastic about Dell 2.0, which includes our plan to provide the best customer experience, build a strong global services business and ensure our products deliver the best long-term customer value."

Of course Dell is going to say that. But Dell 2.0 is going to be more difficult than Dell 1.0. Dell's biggest issue is that its manufacturing prowess isn't the edge it used to be. And Dell doesn't spend enough on research and development to truly innovate. As a result, Dell is mired in a commodity hardware game. That game plan was fine when rivals were inefficient, but HP can now squeeze Dell on price.

Bottom line: Dell 2.0 can't rely on the Dell 1.0 playbook. Michael Dell has his work cut out. Welcome back.  

Topics: Dell

About

Larry Dignan is Editor in Chief of ZDNet and SmartPlanet as well as Editorial Director of ZDNet's sister site TechRepublic. He was most recently Executive Editor of News and Blogs at ZDNet. Prior to that he was executive news editor at eWeek and news editor at Baseline. He also served as the East Coast news editor and finance editor at CN... Full Bio

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