Consumer Electronics

Entrenched Corporate Leader: Michael Dell of Dell

Michael Dell, Chairman and Founder of Dell (DELL)

Despite Wall Street speculating and even calling for the ouster of Rollins, Michael Dell has been able to keep his man.  The stock’s bounce has helped and the last earnings were surprisingly better when sentiment and expectations were very low.  We did a piece on Kevin Rollins being one the 10 CEO’s that Wall Street would like to see out of the company, but this seems as though it has lessened in the expectations and has not been discussed so much now that DELL shares finally stabilized.  It is possible that this could still happen but since it didn’t happen ahead of CES and Davos is almost upon us, it is probable that there won’t be a Dell Inc. on an ex-Rollins basis any time soon.  My partner wrote a piece noting that Carty could be the CEO in waiting if the need arises, but there hasn’t been a peep on anything in a while.

Wall Street has even come to deal with the fact that the company is behind in regulatory filings and is involved with the SEC.  So far it doesn’t even look like the 50% drop at one point over the last two years matters; shares are up more than 25% in recent months and new headlines about H-P taking back more ground aren’t punishing the stock.  Those are short-term numbers and Michael Dell grew this from a company from the ground up (literally).

Michael Dell is the company, and that will probably be the case for a long time.  He’s not quite 42, so in today’s terms and with medical developments now it is impossible to calculate his future corporate years; maybe 30 to 50 years.  Could you imagine what would happen to DELL shares if Michael Dell walked in one day and said, “I have my billions and I am cashing out.”  I don’t know for sure what the exact share price reaction would be, but presumably it would be a 10% haircut to the share price.  Likely even more.  No one expects this, so please don’t turn this into a rumor. 

On the last look, Michael Dell held more than 200 million shares of DELL.  With a tad more than 2 Billion shares outstanding, trust me when I tell you that he can easily pick up the phone and secure whatever votes he needs if something is controversial that needs some convincing.  The exact number of shares doesn’t really matter, it’s the sphere of influence that matters.

Hewlett-Packard has taken back the lead as far as computer sales, and others have been able to catch up by being able to replicate much of their business model on just-in-time supply chains and requiring plants or distribution centers to physically be near-by.  But the competitors can copy, replicate, or duplicate all they want.  Michael Dell is one in the industry that will almost always be a leader, and he’ll likely be able to keep whichever managers in place he wants to.  He has essentially even said this.

As a reminder, here is the link back to the introduction of this CEO segment with the guidelines.

Jon C. Ogg
January 19, 2007