Just like Steve Jobs? Dell tries to make it back to the top

Right. What bong has he been hitting?

“Give us some time – we are making steady progress,” Michael Dell, chairman and CEO of Dell Inc., said last month of his strategy to refocus on computer retailers and consumers.

Michael Dell is undoing everything that made Dell Inc. unique so he can make it the world’s largest personal-computer maker again.

Investors have responded to Dell’s reassertion of himself as a controlling figure. They expect him to revitalize his company just as Steve Jobs did after he reclaimed leadership of Apple Inc. At least six analysts raised their stock ratings since Dell took over on Jan. 31 with a plan to move beyond the direct-to-customer strategy he pioneered and enlist retailers to help sell the company’s PCs.

Dell, 42, has revamped the management team, hiring a new chief financial officer and a new operations manager and switching the top sales executives.

“If you look out a year or two, this is a company that we’ll look back and say was a dominant company that had a temporary slip and they were able to deal with their problems,” said David Fleer, whose $600 million Bristlecone Value Partners LLC in Los Angeles built a holding of almost 1 million Dell shares last year, anticipating a leadership change.

Dell’s PC shipments rose 5.7 percent in the second quarter from the first, according to researcher Gartner Inc., the first sequential increase in a year. The company still trails Hewlett-Packard.

“While still early, Dell’s refocus on its supply chain, the consumer and its diversifying channel strategy should begin to become more evident in the back half of the year,” Goldman Sachs Group Inc. analyst Laura Conigliaro in New York wrote in a July 18 report. She has a “buy” rating on the company’s stock.

The shift toward retailers, announced by Dell after he ousted protégé Kevin Rollins as CEO, is part of a larger campaign to resuscitate sales and earnings. In the last two fiscal years, Dell’s revenue growth fell to 2 percent from 19 percent.

In May, Dell said he would cut 10 percent of the work force. When Dell announces second-quarter results Aug. 30, analysts predict he’ll report that sales and profit rose again.

Dell’s moves “definitely give confidence in the turnaround,” said Brent Bracelin, an analyst at Pacific Crest Securities Inc. in Portland, who in April raised his rating on the stock to “outperform.”

Dell wants to cast aside the perception of the company as a maker of “cheap” machines and convince buyers its consumer PCs are “cool” and its business machines powerful, said Mark Jarvis, 44, a former Oracle Corp. executive hired as Dell’s first chief marketing officer. “He knows precisely what we need to do.”

Dell is mimicking Hewlett-Packard, teaming with retailers in the U.S., the U.K. and Japan.
The world’s largest, Wal-Mart Stores Inc., put Dell PCs in more than 3,500 locations and attributed an uptick in June sales to the machines. In July, Carphone Warehouse Group Plc, based in London, said customers who sign up for its AOL high-speed Internet service in the U.K. will get a free Dell computer.

“You’ll see many tens of thousands of places where customers can buy Dell products all over the world,” Dell said in a July 10 interview. “Give us some time – we are making steady progress.”