Open Letter to Michael Dell – Call Mark Hurd

Michael,

It’s time for a bold move.  Pick up the phone and call Mark Hurd before he signs a non-compete and takes home $40mm plus in severance.  While the media bemoans Hurd’s departure, identifies a possible replacement, and talks endlessly about the impact on the share price, your own recruiter could swoop in and do the “deal of the decade.”

Mark has the DNA desperately needed by Dell.  As someone who lives in Austin, we can tell you that Dell has major problems within the Austin community.  Few people are “proud” to say that they work for Dell.  They do so with resignation of the negative reaction.  Therefore, it’s time to get in front of that perception and bring Mark Hurd to Austin to run Dell.  Despite the fact that he did not live up to his own standards for truthfulness in filing expense reports, we doubt that he will make that mistake again.

Among the criticisms of Dell is that it remains tied to the PC, needs to introduce new non-PC product lines, and needs to make acquisitions to support the growing services business.  Dell has made those moves, but the impact has been negligible.

Hurd’s magic is his ability to integrate the numerous acquisitions he has made.  We’re sure you are well aware that Mark has done several very large deals while at H-P; notably, EDS ($13B), Mercury Interactive ($4B), 3Com ($2.7B), Opsware ($1.6B), and Palm ($1.2B).   Each one of these acquisitions has been integrated quickly, and has been accretive.  The H-P process is to cut costs quickly and cut people.  This has been accomplished while keeping morale high – which is a welcome byproduct when the stock price rises.

The EDS transaction was done at 60 cents per $1 of revenue, while Dell’s acquisition of Perot Systems was done at $1.60 per revenue dollar.  In other words, Mark was proactive in acquiring EDS, yielding the relatively inexpensive price.  Dell’s acquisition of Perot seems far more reactive.

At the last analyst meeting in June, the consumer strategy was completely missing – even though Ron Garriques was showing his products at the “meet and great” the previous evening.  The discussion revolved around the Windows 7 upgrade cycle, and the benefit of Perot on Dell.  The investment community was not impressed as the stock was down twice as much as the market that day.

Dave Johnson, the former head of M&A from IBM, participated in the meeting/discussion, but he couldn’t reveal his strategy – for obvious reasons.  However, a CEO like Mark Hurd would make he and Dave a “dynamic duo”.

Bottom Line: Call Mark Hurd.  If for no other reason, just to say, “Good Luck”.

P.S. If you can’t get Hurd, we hear that Mark Papemaster from Apple is available, and knows how to build a popular mobile phone.

P.P.S. Being on Cramer’s Wall of Shame is an unnecessary indignity.  Do something bold and get off that wall.

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Richard Piotrowski CFA is a former #1 ranked securities analyst, and the Managing Partner of Outram Research LLC, which focuses on assisting startups and prospective turnaround companies to define an executable product strategy, competitive strategy, and an exit strategy.  You can follow Richard on Twitter: @Angelpitchdoc.  He can be reached at richard@outramresearch.com, or at his blog: angelpitchdoc.wordpress.com.  Also check out our website: www.outramresearch.com

About Richard Piotrowski, CFA

Richard Piotrowski, CFA, is a formerly a #1 ranked securities analyst, who has 20 years of experience building, dissecting, and fine tuning presentations, business models and valuation models of all kinds. The experience has been gained working in the investment community on both sides of "Wall Street", on "Bay Street" (Canada), as well as on "Main St." as Chief Financial Officer, Chief Operating Officer, as well as Evangelist and Marketing Director, where he focused on building messaging for solution sales opportunities based on value positioning, high ROI and fast payback. Richard joined Canada’s investment banking community in the early 1990s as an analyst following technology companies. He was recognized within two years by the Street, and was ranked "First" for Quality of Research in the survey of institutional investors conducted by an independent advisory firm – Brendon Woods. Richard was also the founding member of the internet technology research practice at two boutique investment banks.
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