Top Dell execs leave as PC maker restructures

By Jim Finkle

BOSTON (Reuters) - Two top Dell Inc executives recruited to help turn around the No. 2 PC maker are leaving as part of the second major staff shake-up in the two years since founder Michael Dell returned as CEO.

The company, once the top PC maker, has slashed jobs and struggled to regain market share it lost to Hewlett-Packard Co and its stock has dived more than 60 percent this year.

The revamp calls for all sales to businesses to be managed centrally, rather than from three regional headquarters around the globe.

The company's president of global operations, Mike Cannon, will be succeeded by 21-year company veteran Jeff Clarke. Marketing chief Mark Jarvis will also leave the company.

The two executives are departing less than two years after Michael Dell wooed them with sign-on bonuses of $2 million for Cannon and $250,000 for Jarvis.

"It's a big shake-up," said Tim Ghriskey, chief investment officer for Solaris Asset Management. "Will it succeed over the long term? Who knows? But I think a shake-up is positive."

Dell's larger rival HP has cut costs and boosted market share since it named Marc Hurd chief executive in September 2006. Michael Dell returned as CEO of his company four months later, shortly after HP wrested the top spot in the global PC market.

Dell has cut more than 8,000 jobs this year, and asked employees to voluntarily take up to five days of unpaid vacation to further lower costs.

Analyst Shannon Cross of Cross Research expects Dell to announce another round of layoffs next year as it struggles to bring costs in line with falling sales.

"My guess is that they will find some cost savings, that they will shrink their organization to match lower demand," Cross said. "We're going to see this play out in the next couple of quarters."

Michael Dell has failed to turn around market share losses since his return in January 2007. Dell's market share slipped to 13.6 percent of global unit PC sales in the third quarter of this year, from 16.1 percent in the third quarter of 2006, according to market researcher Gartner.

Meanwhile, HP's third-quarter share climbed to 18.4 percent from 16.3 percent two years earlier.

During the same period Acer Inc more than doubled its share to 12.5 percent, making it the No. 3 PC maker. Lenovo Group Ltd's share has dropped to 7.3 percent from 7.5 percent, putting it in fourth place.

BACK TO CENTER

Dell will centralize a far-flung global organization responsible for sales of its business products, which include personal computers, servers and storage equipment.

The three new segments will supervise Dell's business with large corporations, government agencies, and small to mid-sized companies.

Dell's consumer business is already centralized under unit president Ron Garriques.

Dell shares were up 8 cents at $10.31 in midday Nasdaq trading. They hit a 52-week low of $8.72 on November 21 and a high of $26.04 on August 2008.

Jarvis, the marketing chief, will be replaced by Erin Nelson, formerly vice president of marketing for the Europe, Middle East and Africa region.

The company's new large enterprise division will be headed by Steve Schuckenbrock, who is currently president of global services and chief information officer.

The public division will focus on technology work in areas such as government, education, health care and the environment, and will be overseen by Paul Bell, currently president, Dell Americas.

Lastly, Steve Felice, currently president of Dell Asia-Pacific and Japan, will head the small and medium business division.

The company plans to align its financial reporting with the new structure during the first half of Dell's fiscal-year 2010. That starts in February.

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