MoneyWatch Tech

Michael Dell: It Is Time For You to Go

By Erik Sherman

Updated on: August 18, 2010 / 8:26 PM EDT / MoneyWatch

An SEC filing yesterday revealed that a quarter of Dell (DELL) proxies abstained in a vote on Michael Dell's continued presence on the company's board of directors. That's not as bad as Yahoo (YHOO) co-founder Jerry Yang did in 2008 on the heels of bad financial performance, but it's still a significant reaction to the disastrous string of poor results and scandals that have dogged the man and his company for years.

There comes a time when people and organizations must part ways. That time has arrived for Dell. There would be no company without the founder and CEO, but, taken in total, his stewardship has been worse than any other high tech leader. The best thing he could do for the company, its employees, shareholders, business partners, and customers is realize that his day passed some time ago. He should move on and make room for others who might be able to right the strategic, financial, and ethical performance of Dell.

Let's take a quick review of some of the things have happened:

Dell had to settle charges of accounting fraud by paying $100 million to the SEC, with Michael Dell paying $4 million himself. The agency charged that the company failed to tell investors how much it depended on Intel's chip rebates.
Footnoted.org makes a strong argument that Dell the company might have known about Dell the man's hot water with the SEC long before it told investors.
Two major unions actively sought to have investors withhold their votes from Michael Dell.
Dell has been taking a beating in a lawsuit over the company allegedly selling defective PCs and then covering it up. Now it faces charges of having withheld evidence in the trial.
Where at one point in 2005 Dell had about 25 percent PC market share, it now has about 12 percent.
Stock price today is less than third of what it was in the beginning of 2005.
In 2005, Dell has taken a huge plunge in popularity with students, which means that, as people matriculate, a competitor's name is top-of-mind when it comes to buying computers.

Under Michael Dell, the company has managed to squander a major market lead, shatter shareholder value, and also get embroiled in a series of activities that make Apple (AAPL) and its CEO Steve Jobs look like the poster children for corporate transparency and openness -- even after not information shareholders about Jobs real health issues.

To argue that Michael Dell the man could still be relevant to Dell the company is to argue that the good of a business and its real owners should take second stage to the ego of a founder. Bill Gates had the grace to step down as head of Microsoft (MSFT) when it was time. Too many CEOs in high tech companies -- whether Adelphia, Worldcom, Computer Associates, or twice at HP (HPQ) -- have held on even though they were clearly a detriment. Michael Dell should step down before any more embarrassment -- or damage -- can occur.

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