'Marketplace' Report: Michael Dell's Return Michael Dell is back at the helm of Dell, the company he created in his college dorm room 22 years ago. Dell returns as the computer manufacturer struggles with disappointing earnings, an eroding market share and a federal accounting probe.
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'Marketplace' Report: Michael Dell's Return

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'Marketplace' Report: Michael Dell's Return

'Marketplace' Report: Michael Dell's Return

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ALEX CHADWICK, host:

Back now with DAY TO DAY. Michael Dell gets his job back running the company he founded decades ago in his college dorm room - the computer company, the one called Dell.

Years ago, he turned over the top job to a protégée, Kevin Rollins. But since then, the Dell computer company has not been doing so well.

Joining us, John Dimsdale of MARKETPLACE. John, what's going on here?

JOHN DIMSDALE: Well, you know, Dell used to be the cool computer company. Remember those ads, dude, you're a getting a Dell. It sells directly to customers. You order by phone or over the Internet, but a couple of things have happened just in the last couple of years to trip up the company.

One is that Dell started targeting businesses as customers. Well, businesses don't replace their computers that frequently and they demand more customer service, which is an expensive add-on.

Meanwhile, other companies have gained in the consumer market, HP and Lenovo, for example. And consumers seemed to have acquired a taste for shopping for their computers in stores. Best Buy, Circuit City have increased their computer sales ever since Dell was off chasing business customers. So Dell's sales and market share have dropped.

And last but no means least, there have apparently been some accounting problems. Government securities investigators have been going through Dell's books, although we don't know yet just what they're looking for.

CHADWICK: You know, this sounds a little bit like Apple, doesn't it? You know, Steve Jobs goes away and then he comes back, things get better for the company. Is that what you see coming with Michael Dell?

DIMSDALE: Well, that's what Dell's going to try to do. That certainly is a model. And when he - when this announcement was first made, the stock price jumped. And when the news came out late yesterday, investors, you know, were welcoming the return of Michael Dell and his enthusiasm. But that initial euphoria has yielded to more sober assessments of the problems.

Brian Gammage is a computer analyst with Gartner Research.

Mr. BRIAN GAMMAGE (Computer Analyst, Gartner Research): You know, Dell had a very tried and tested approach to the PC market, which was clearly successful a number of years ago, and no longer is reaping the same results. The answer wasn't there before. Having somebody who comes from the inside of the organization now reassuming the top responsibility is not going to make the solution any easier.

CHADWICK: John, is there a kind of a clear plan, something Michael Dell has to do to fix this?

DIMSDALE: Well, he's getting a lot of advice. Some say he should scrap the model of selling only directly to consumers and move into stores. Many people think that Dell's going to have to improve its notebooks and laptop computers, which is where the real growth area is in the future.

For his part, Dell says he wants to beef up Dell's image as a computer consultant for big corporate customers. He thinks that's where the big profits are. But the company is going to have to try something to turn around the current trends.

Later on MARKETPLACE we're going to talk about the declining popularity of figure skating.

CHADWICK: Figure skating on MARKETPLACE?

DIMSDALE: Absolutely.

CHADWICK: Thank you, John.

DIMSDALE: It's all about money.

CHADWICK: Thank you. John Dimsdale, Public Radio's daily business show, MARKETPLACE from American Public Media.

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