Dell takes reins as Rollins leaves

Michael Dell has taken back control of his troubled company following the resignation of Kevin Rollins.

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By  Peter Branton Published  February 1, 2007

Michael Dell has taken back control of his troubled company, following the resignation of Kevin Rollins as CEO yesterday.

In a statement released yesterday, the PC giant said Dell would resume the duties of chief executive, effective immediately. Rollins has also stepped down from the board of directors. In the same announcement the company also issued a profits warning that it expects both revenue and earnings for its fourth quarter fiscal year 2007 results to be down on analysts’ forecasts.

The PC manufacturer has been reported as saying the appointment is not a “short-term assignment” and that the board of directors was involved in Rollins’ decision to hand in his resignation.

Shares in the firm rose over 5% on the news, with institutional investors having grown increasingly frustrated with Rollins’ leadership. The past year has seen increasing calls for his departure, as Dell faced one crisis after anther. The company has lost its number one spot in the PC market to rival HP, suffered increasing criticism of its customer service and is the subject of an ongoing investigation by the US Securities and Exchange Commission (SEC) into its accounting practices.

In August, Dell issued a recall for 4.1 million notebook batteries, one of the largest electronic products recalls in history. Battery supplier Sony took responsibility and other companies also followed suit with similar recalls, but footage of a Dell laptop catching fire was widely circulated on the internet.

Rollins has been CEO since 2004, having joined Dell from management consulting firm Bain & Co in 1996. While the company made spectacular progress between 1997 and 2004 – with Rollins being seen as making a major contribution – complaints about customer service had already begun by the time he took on the CEO role.

Rollins was not helped by the resurgence of HP, which has made steady progress since Mark Hurd became CEO in 2005.

“Kevin has been a great business partner and friend. He has made significant contributions to our business over the past ten years. I wish him much success in the future,” Dell himself said in a statement

Dell, who started the company in 1984 from his college dorm, now needs to overcome the challenges that defeated Rollins and convince investors that the firm is back on track.

Rollins’ departure was clearly welcomed by some investors but analysts have already pointed out that Dell and Rollins worked very closely together in management, with both being heavily involved in decision-making, such as the ‘Dell 2.0’ business strategy that they outlined last year.

Dell’s Middle East operation declined to provide a comment this morning.

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