In The News

Dell Services Unit Perot Systems to Lay off 54

The AP is reporting that Perot Systems is laying off 54 of its 900 employees located in Lincoln, Nebraska.

Perot’s spokesman says that the layoffs are not related to Dell’s intentions to acquire Perot as announced in September.

Dell’s in a really difficult place. With its recent factory closings and repeated downsizing at its Round Rock headquarters, any layoffs regardless of reasons will be met by the press and public alike with skepticism.

IBM Loses Appeal Dell M&A Case (Bloomberg)

Oct. 24 (Bloomberg) — International Business Machines Corp. lost its appeal of a ruling by a judge who had denied the company’s request to block its former mergers-and-acquisitions chief from performing duties at Dell Inc.

“We have considered all of IBM’s arguments and find them to be without merit,” the three-judge panel of the U.S. Court of Appeals in New York said in its Oct. 22 decision. “Accordingly, the June 26, 2009, order of the district court is affirmed.”

IBM had sought an injunction for the duration of the lawsuit in which it seeks to enforce a one-year non-competition agreement. David L. Johnson, a 27-year IBM veteran, says that agreement isn’t valid because he deliberately signed it in the wrong space.

“We are disappointed in the court of appeals’ decision and are prepared to move forward with proceedings in the District Court to protect IBM from the misuse of our intellectual property and trade secrets,” Doug Shelton, an IBM spokesman, said in an e-mail yesterday.

Dell hired Johnson in May, triggering the lawsuit in which Armonk, New York-based IBM accused him of violating the agreement.

“We’re pleased that the court of appeals has agreed with” the “district court’s conclusion that Dave Johnson is not subject to a non-competition agreement and that there is no reason or justification to keep Dave from working for Dell,” David Frink, a spokesman for the Round Rock, Texas-based company, said in an e-mail.

Dell on Sustainability Kick; Generating Power and Protecting Against Hail Damage

Dell's Parking Lot Solar Array

Dell just rolled out a new solar array at its Round Rock Headquarters (is that RR2 in the picture?).  The array of panels can generate 131,000 kwH of electricity each year for its corporate headquarters and also includes 2 charging stations for any electric cars the employees drive to work.

All efforts at combating Global Warming Climate Change aside, I bet there’s a rush to park under those locations by employees, even if it means parking farther away from the building. If you haven’t lived in Central Texas, your car is an oven between the months of May and October due, regardless of tint and sunshades. Also the Texas Hill Country is known for getting hail over an 1″ in diameter multiple times a year. Solar or no solar, its nice to have covered parking!

Dell to Face Backlash in US Over Factory Closures?

When Dell brought in Mike Cannon as its head of operations, it was pretty clear; In order to reduce expense overhead, Dell would be shutting down much of its in-house manufacturing operations and shifting production to contract manufacturing. Dell’s expense structure was bloated and needed to trim down in order to compete with HP and Acer who have utilized this practice for years.

However, there may be a large backlash forming against the company who has, over the years, focused a majority of its sales focus in the United States and other western countries.

Many of these now-closed production centers (Texas, Tennesee, North Carolina, Ireland) have caused controversy in those localities. Jobs lost have been lost (for good?) and voters are left scratching their heads on why Dell received government incentives to bring these factories in the first place.

Will this affect Dell’s ability to sell to consumers and companies in these affeted areas? More so, could this negative brand impact grow beyond across the US and Europe? Check our articles like this, from a local North Carolina TV Station (WRAL): “Dell is turning its back on the U.S. – Just say no to Dell”.

In this current economic climate, you want to make all the friends you can. There’s a chance that consumers will rally around “Made in the USA products” in response to the negative ramifications of globalism. Dell and other US companies better find a way to respond to this.

Dell Will Repay Incentives to Local NC Municipalities

North Carolina’s News & Observer is reporting today that Dell has agreed to pay back $26.5M to local city and country authorities. Dell had originally received almost $300M from city, county and state programs to build its now closed plant in Winston-Salem, North Carolina.

Dell Featured in Business Week; Questions About Long-Term Success

Dell is featured in this week’s Business Week magazine . Don’t want to bore you with too many details when you can read the full article yourself.

Although it a bit of a ‘puff piece’ (PR teams – good work!), Dell gets its message out there that Michael Dell has been in control for a couple years now and while difficult, he has done a lot to reconfigure the company into what is now Dell 2.0 (or is it Dell Version 2.1 with service pack 3?). 

What to look for in the article:

• New Management & Customer Alignment: 
  What’s said: Dell hired a number of new Senior Execs with deep experience and organized the company into Global groups organized by the type of customer.
  What was left out:  In the process, the company has slashed headcount and morale is very low. And by the way, the company has always been organized around type of customer (SMB, Consumer, etc…), its just now that the company has big global groups coordinating across these customer types rather than letting each region team manage this.
• Product:
  What’s said: Hired in designers from Nike and spending more than he used to on product design. The new Lattitude Z and Dell Adamo show that Dell can definately make a sexy system rivaling Apple and others.
  What’s Left Out: Yes, sexy products are good for PR and competing with Apple. Thing is that Dell has always focused too much on US and Europe and not the emerging market countries where all the growth is happening. In order to succeed, Dell (and any other computer manufacturer for that matter) needs to develop better low-cost, high feature products to compete China and the emerging markets.
• Enevitable Industry Consolidation
  The article did a great job in the wrap up to talk about hurdles for the company. Publicly traded, cash rich and no growth = Dell is a major acquisition target. The PC Industry already has too many players and is ripe for consolidation. Will Dell be the aquirer of a company like Acer and vault to #1 in world-wide shipments? Will someone with deep pockets acquire Dell and kick Michael to the curb? Or worst of all, will Dell not find a dance partner and find its share and influence slip as other companies merge?