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SAN FRANCISCO - Dell chairman and founder Michael Dell has reclaimed the position of chief executive at the PC maker, ousting Kevin Rollins after he lost the lead in personal computers and failed to revive earnings growth.
The company warned this quarter's results would fall below analyst estimates, in the latest sign of the challenge it faces from HP and tough pricing in a cut-throat industry.
In one of the best-known technology start-up tales, Dell started the company in 1984 in his university dorm room with US$1000 ($1500), and made it a PC powerhouse.
But results have been uneven since Rollins took over in July 2004.
News of Dell's return lifted the stock by nearly 5 per cent, in hopes he would reinvigorate the company.
Yet Dell gave no specific plan for how to mould it into what he calls "Dell 2.0," and he and Rollins have long said they ran Dell together.
"He has to bring in new blood," Endpoint Technologies Associates analyst Roger Kay said of Dell, who remains chairman of the company.
"They need to bring in new people who are creative, energetic, who can bring spice to the company."
Analysts blamed Rollins for Dell's slowing growth, Kay added. Wall Street "has been calling for his head for a long time", he said of Rollins, 54, who also left Dell's board.
The founder, whose 10 per cent stake in Dell is worth about US$5.5 billion, pioneered a "build to order" model in the personal computer industry, eventually becoming No 1.
But Dell lost that title last year to HP in a tough year for the company. Dell recalled batteries made by Sony in the biggest consumer electronics recall. It has also had complaints of poor after-sales service.
In December, Dell named former American Airlines chief Donald Carty as chief financial officer, replacing James Schneider, who left as Dell faced probes into its finances.
"It's tough for me to sit here and say that's a good thing," Pacific Crest Securities analyst Brent Bracelin said of the Rollins departure on top of the recent CFO resignation.
Dell's PC shipments in the US market, which make up more than half its unit volumes, fell nearly 17 per cent year-on-year in the fourth quarter, according to market researcher IDC.
Dell's worldwide share of the PC market narrowed to 14.7 per cent in the fourth quarter from 17.5 per cent a year earlier, IDC said.
Rollins became CEO after years as president and chief operating officer, having joined Dell in 1996.
When Rollins added the CEO title, founder Dell said it was but an acknowledgment of his role.
The two even had offices built at the Texas headquarters with a glass wall between them.
It is not immediately clear what Dell can do to help the company.
Eric Ross of ThinkEquity Partners said the profit warning was Dell's third financial miss in three quarters, noting that it faces continued market share loss and a tough pricing environment.
"Doubling down on their old strategy is probably not going to be the solution because they are so much bigger now," said Daniel Renouard, an analyst with Robert Baird & Co.
Reuters Estimates and First Call both said Wall Street, on average, expected earnings of US32c per share on revenue of US$15.3 billion.
Dell did not give specific revenue and earnings expectations with its warning.
Analyst Kay said Dell's moves into flat-panel TVs and printers were not as profitable as had been expected. Many had expected Dell eventually would challenge HP for the title of world's largest maker of computer printers.
Shares of Dell jumped to US$25.35 in extended trade. In regular trade, the stock fell US7c to close at US$24.22. The stock has fallen some 17 per cent in the past year.
- REUTERS, BlOOMBERG
