Shareholder groups are becoming more “activist” and this trend will continue in 2007. Private Equity and LBO Groups can only acquire so many companies, and there are only so many candidates that can run behemoths. The best way to see change is right at the top in many cases and there is a slew of US public companies that would do far better if they could replace current management. These aren’t in any ranked order, so the first isn’t the worst and the last isn’t the best of the worst. The problem in stating this is that it is very easy to come in and criticize, yet finding replacements for companies this size is not exactly an easy feat. Private Equity as a sector has taken many of the talented leaders, and they haven’t stopped with the age limits that many public companies live by. There just aren’t too many Lou Gerstner and Jack Welch carbon copies out there.
Kevin Rollins of Dell (DELL):
Rollins needs to go on one of those round-the-world cruises and he needs to just stay on the boat indefinitely. Michael Dell needs to retake the helm, and afterall the company isn’t named ROLLINS INC. is it….. Not only does this need to happen, but this needs to happen before they go to Davos in early 2007 so Michael Dell can re-establish the supreme leader position there. Kevin Rollins just doesn’t have the trust of Wall Street and since he took over DELL managed to lose the position of the PC-Leader status. The street knows Michael Dell and they respect him, so now it really boils down to if he wants to step back in. He can sell his stock at $15.00 or at $35.00, and the net net result is that he’ll be a self-made billionaire and have more money than he could easily spend in a series of lifetimes. So he might not want it.
The customer service issues have not gone away, even if they are said to be better. Rollins may get saved since the stock has recovered roughly 40% from its extreme lows, but the street doesn’t trust him. His sincerity of saying that things need to improve didn’t really hold much credence after the SEC investigation blunder. The recent guidance beating the entire negative bias of the street may also act as a safety net for him, but it looks like the street would still rather have Henry Rollins (the singer) in charge instead of Kevin Rollins. The stock would probably pop at least $1.00 if a headline hit during the market day starting “Michael Dell Takes Back the Helm.”
Jon C. Ogg
December 14, 2006
This is part of “10 CEO’s THAT NEED TO LEAVE” series coming out today and tomorrow.
Jon Ogg can be reached at email@example.com; he does not hold securities in the companies he covers.