Sept. 14--Michael Dell's successful campaign to buy out the computer company he founded turned into a grueling year-long marathon.
And now the really tough race begins.
The CEO's message to employees so far has been: Get ready for big changes.
"Dell needs to transform and we need to do it quickly," the 48-year-old company founder wrote to workers in a recent letter. "The technology landscape has fundamentally changed since the company was founded and success requires this transformation."
The company founder's message to shareholders was that the computer maker needed to go private in order to give it more freedom and speed in taking bigger risks to reshape the business. A private company, he argued, can focus on long-term goals and not be distracted on meeting quarterly profit targets set by Wall Street.
Dell and his financial ally, Silver Lake Partners, are expected to complete the buyout within several weeks and take the company private soon afterwards.
While the Round Rock company gets ready to remake the business, it is among a group of former personal computer powerhouses that are searching for a new game plan. Dell's arch-rival, Hewlett-Packard Co is embarked on a long-term reorganization under new CEO Meg Whitman, although it is remaining a public company. And Microsoft Corp., Dell's long-time software ally, has started on its own reorganization effort, with the restructuring of its senior executive ranks and the announcement that CEO Steve Ballmer will step down within a year.
Why all the upheaval? Because the information technology industry is in the middle of a major shift. The personal computer, which was at the center of information technology for more than two decades, now finds itself in a global sales slump with declining prices and profits. PCs are being challenged by the rise of mobile devices, including smartphones and tablets as an alternative way to get access to personal and business data online. The problem is that all three PC-centric players, Dell, HP and Microsoft, have failed at least once in gaining a solid foothold in mobile devices. The only PC maker with a sizable business selling mobile devices is China's Lenovo Group.
If that weren't enough change, business customers are pushing for far more efficient ways of spending on IT. One leading option is cloud computing, in which companies can share, rather than own, the expensive computer and networking hardware than runs their key software applications and controls their Internet presence.
For the tech companies that can navigate all these changes successfully, the eventual rewards should be renewed growth and profits.
But analysts are divided on whether Dell is going to join the ranks of the new high-tech winners that emerge over the next several years.
'Blood, sweat and tears'
Even industry analysts who are optimistic about Dell's future have to acknowledge that the company's long-term outcome is uncertain.
"There are enormous obstacles," said analyst Roger Kay with Endpoint Technologies Associates. "No one said this was going to be easy. All Michael Dell has promised is blood, sweat and tears."
Kay notes however that Dell brings considerable assets to build on, including a global brand and business operations and established connections with the key players in the electronics supply chain.
Another company asset, Kay says, is CEO Michael Dell.
"Michael Dell is acutely aware of (the problems the company faces) and he is dealing with them," the asset said. "He is thoughtful. He is smart. He is not afraid to make decisions. He has a lot of experience and the right connections. It is hard to think of who can do that job better than he can."
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