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Michael Dell Climbs Back in the Saddle
Boomerang CEO Michael Dell's immediate solution to his company's deepening crisis is to scrub all bonuses
By: SOA News Desk
Feb. 10, 2007 04:30 PM
Boomerang CEO Michael Dell's immediate solution to his company's deepening crisis is to scrub all bonuses for 2006, but he promised people above-market raises. For an incentive, he's offering a shortened vesting period of three years for future grants.
Michael said in an internal e-mail last Friday that escaped into the wild over the weekend - complements of the Austin American-Statesman - that the company is handicapped by a money-leaching bureaucracy, described as its "new enemy," and that he will reduce the 20-odd CEO reports to 12.
There won't be a COO or a new CEO either. Michael reiterated that he plans to be CEO for the next few years. However, Paul Bell, who runs Europe, is going to be put in charge of the US and the company is looking for a chief marketing officer.
Michael, who predicts a "tough couple of quarters ahead," wants other redundancies eliminated and operating expenses held down. A global operations unit will be created to run manufacturing and procurement.
He also talked about speeding up new product development, moving more aggressively into the consumer and small business markets with new brands - Dell has started selling Sony LCD TVs on its site promising other names as well - selling new products in emerging markets, pumping storage and servers, completing the company's dual processor supplier strategy, and expanding Dell's global services by "building, partnering and buying."
Michael also vowed "not to run away from a cost fight."
Meanwhile, in addition to all its other problems, Dell has been hit with a class action suit that charges it with inflating its earnings with "secret kickbacks" from Intel worth about a billion dollars a year paid quarterly for not using AMD chips.
It also accuses current and former Dell top brass of reaping $3.3 billion from insider trading while shielding accounting and product issues from shareholders. It claims it constitutes "one of the largest insider trading 'pump-and-dumps' in history."
The new suit, filed on behalf of two institutional investors, is beholden to AMD's antitrust suit against Intel in claiming Intel's rebate program is illegal, but at 251 pages, it's five times as long.
The shareholders suit alleges the payments weren't volume discounts, or co-marketing funds, or your traditional rebates and were known only to about a dozen people inside Dell at Intel's insistence for fear of the antitrust authorities.
Intel, which is named in the suit, says the payments are normal rebates and perfectly legal. Dell has yet to say anything.
Intel added that the SEC and Justice Department investigators, who have been looking over Dell's books, apparently sifting through its revenue recognition practices, never contacted Intel. Well, at least not yet.
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