March 4, 2004 10:53 AM PST
Rollins to be next Dell CEO
Michael Dell, founder of the Round Rock, Texas-based PC maker, plans to pass the crown to his second-in-command, Kevin Rollins, in July.
Rollins, currently Dell's president and chief operating officer, has been handling the day-to-day work of the company for some time, while Michael Dell has spent more time focusing on his company's strategic initiatives.
As part of the decision, which was made Thursday by its board of directors, Rollins will become president and CEO on July 16 at the company's annual meeting of shareholders. Dell will remain as chairman, continuing the company's "two-in-a-box" chief executive office.
The PC maker said the changes, which coincide with the 20th anniversary of its founding in May, are consistent with the two executives' current roles. Dell has been focusing on initiatives such as new technology and customer service of late, while Rollins has been working on company strategy and operations.
"Michael and I, to a great extent, share the office," Rollins said in a recent interview with CNET News.com. "While we both have areas we work on--and we try to define those quite closely--we share a lot of responsibilities, and whoever is available does those things. We collaborate on our ideas of what we want the company to do. But I think that in terms of the day-to-day business, I run the company. He runs technology. We share the strategy stuff."
The timing of the announcement might have come as a surprise, since most people don't follow the schedule of Dell's board meetings. However, its occurrence was no surprise, analysts said. The two executives have been moving toward the change in roles for some time. More than anything else, it publicly acknowledges Rollins' contributions to the company, they said.
"I think that Dell may be ready to have Rollins recognized both internally and externally as the leader of the company," said Brooks Gray, an analyst at Technology Business Research. "Rollins has been running the show, and now he has the title he deservers."
The company had been faced with the question of how to reward Rollins as president, given that founder Dell, now 39, was so young, according to Roger Kay, an analyst at IDC. Rollins is 51. The answer it found was to give Rollins more control over time, he said.
The change could open up a new role for Dell, according to Kay. "In some sense, Michael (Dell) has more options available to him than anyone on Earth, right now. Over time, this represents an opportunity for Michael to gradually step aside" if he chooses to, he said.
Dell as a company may continue to aim for higher revenue goals or to enter new markets, but it's likely to largely keep on with the business model that Dell and Rollins have built for it.
"From a business continuity point of view, this doesn't mean much change," Kay said.
Paving the way
Rollins, the former Bain partner who signed on with Dell in 1996 and who became its president in 2001, has played a major role in designing the strategies that the company has used to attain its position as the top computer manufacturer in the world.
Under his watch, Dell has increased its market share and revenue. It has also sharpened its focus on the business market, where it sees a major opportunity to keep growing. Since 2001, the company has entered several new business areas, including storage systems, which it went into through a partnership with EMC. It has also tackled printers, network switches, digital projectors and launched a digital home initiative to sell products such as music players and flat-screen televisions.
At the same time, Dell has kept cultivating its core PC business. The company saw its PC and server unit shipments jump 25 percent to 25.8 million in 2003, according to IDC. Thanks to that rise, Dell's market share grew to 16.9 percent in 2003 from 15.1 percent in 2002. The growth also helped the company edge out rival Hewlett-Packard, which shipped 25 million units, or 16.4 percent of the market, in 2003, according to IDC.
The company has also reported a string of quarterly revenue and profit records recently. It ended fiscal 2004 with revenue of $41 billion, up from $35 billion in its fiscal 2003. The company's goal, set in 2002, has been to reach $60 billion in annual revenue.
Rollins is also expected to be nominated for Dell's board of directors at the annual meeting. If elected, he would replace former Dell executive Mort Topfer, who chose not to seek reelection to the board, the PC maker said in a statement.
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