Thursday, August 19, 2010

Mark Hurd for CEO

Levi Sumagaysay of Good Morning Silicon Valley (the Merc) has a wonderful summary of Dell’s many woes, including unhappy shareholders, a $100m fine to the SEC, allegations of shipping defective computers and a recall of servers infected with malware.

Some of this is just normal bad news and some of it suggests a lack of attention to execution that was once Dell’s hallmark and source of competitive advantage.

However, the revelation (and SEC fine) of Dell’s financials from 2002-2006 were inflated by $1+ billion in “loyalty payments” (kickbacks?) from Intel suggests that the core business has been in trouble for a while, as rivals like HP have copied Dell’s once-unique operational efficiency (and as the model has broken down with the rise of laptops).

Michael Dell’s return as CEO in 2007 was assumed to be the solution to the company’s post-bubble woes, but so far the second time around has been much harder. Given the no-confidence vote in Mr. Dell by 25% of the company’s shareholders, perhaps it’s time to find a new CEO.

If they need a commodity IT turnaround specialist, I know just the guy: Mark Hurd. He’s turned around two companies already — NCR and HP — and now finds himself unexpectedly with time on his hands.

Yes I know that Hurd probably has a non-compete clause, but under California law (where HP has its headquarters) it’s difficult to enforce them except under very narrow circumstances. (Ex-Compaq CEO Michael Capellas — jettisoned by Carly Fiorina after the acquisition — is also available, but nothing in his resume suggests he is prepared for today’s brutal commodity price wars.)

So hiring the now-tarnished Hurd might be seen as risky, but desperate times call for desperate measures. He’s still as talented as he was a year ago, and the 134% increase in share price during his reign is unmatched by big tech CEOs not named Steve.

Perhaps the outside directors of Dell should give Mr. Hurd a call: he lives in Atherton, Calif.

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