David Politis

On the surface, the headline from today’s Dell Inc. news release seems fairly straightforward: “Michael Dell Assumes Duties as Chief Executive Officer of Dell Inc.”

And yet as one begins to dig a bit deeper into the nuances of the release, I believe that clues begin to emerge as to what likely happened at Dell in the past 24-48 hours.

First some context.

According to Reuters, Kevin Rollins joined Dell in 1996 as senior vice president, corporate strategy following a stint with management consulting firm Bain Inc. After a variety of escalating promotions, Rollins was tapped as CEO of Dell in July 2004.

Note the praise Michael Dell heaps on Rollins praise in the following quote taken directly from the news release announcing Rollins’ promotion to Dell CEO on July 16, 2004:

“There is no single person who deserves more recognition for our great accomplishments than Kevin. His becoming CEO is as much about recognizing what he’s already done as it is about our confidence in his future and Dell’s.”

My how the worm has turned. Now, let’s look at today’s news release.

One, the lead paragraph explains that Mr. Dell will take over as CEO “effective immediately” replacing Kevin Rollins. Notice that the release is not about Rollins resigning; it’s about Dell becoming CEO. Interesting distinction.

The next several paragraphs are all about Michael Dell and how wonderful he is, which is fine.

But note that it’s not until the fifth paragraph that we learn that Rollins has even resigned from Dell at all, both as CEO and from his position on the Dell board of directors. Here again, note the use of the term “effective immediately.”

I point out this phrase because my experience in tracking news announcements during the past 20 years suggests that any time a release says an executive is stepping down “effective immediately” I am quite confident that the decision to resign was not made voluntarily.

Note also in the sixth paragraph that Michael Dell says that “Rollins has been a great business partner and friend,” which sounds perfectly fine, even laudable on the surface to say nice things about a former business partner. But note that the verb used is in the past tense — “has been” instead of “is.”

Obviously I understand that Rollins is no longer Dell’s business partner, but couldn’t this sentence have been written ”Rollins is a great friend and has been a great business partner” just as easily? Maybe it doesn’t roll off the tongue as well, but for something this important, I’m confident the release was written in this manner on purpose.

Finally, there are two more things in the middle sentence of the sixth paragraph that I think bear further examination: “He has made significant contributions to our business over the past ten years.”

Did you see the classic PR mistakes made in this sentence? Specifically, any public/investor relations pro or journalist worth her salt knows that the word “over” is used in PR- and news-writing to signify a place of position and not a period of time. (For example, “He held the bat over his head.”)

Additionally, with minor exceptions (and this isn’t one of them), numbers 10 and higher are always shown as a number and not spelled out in PR- and news-writing, while the numbers zero through nine are always spelled out.

Hence, the sentence should have been written “He has made significant contributions to our business during the past 10 years.”

Taken in concert, I believe all of these points suggest that this release was pulled together very quickly (my guess is within a couple of hours) without the input of PR professionals.

I also believe it was probably written overnight (probably by Dell’s legal counsel) with vetting by Mr. Dell himself and the Dell board, then prepped for distribution and publishing on the Dell Website and shoved out the door.

If I take these suppositions a step further, it would not surprise me to learn the forced decision to resign was presented to Rollins in a Dell board meeting last night.

Do I know this for sure? Of course not.

But almost every news release leaves clues as to what really happened behind the scenes, including today’s release from Dell Inc.

(For more on this topic, check out my other blog post at UtahTechWatch.com.)

Early this morning, University Venture Fund announced that it has tapped 10 MBA students from the Wharton School to assist the UVF in running its $18 million private equity fund.

Founded in 2001 at the University of Utah’s David Eccles School of Business as an entrepreneurial tool for UofU students, the UVF went on to raise $18MM from limited partners, making it both the first and largest student-run private equity firm in the United States.

Following today’s announcement, the Wharton connection brings to the self-sustaining UVF team 10 Wharton students and four faculty advisors, including a Fulbright scholar, the ex-CTO of NASA, a student with an M.D. from John Hopkins, as well as students with work experience from Microsoft, Google and Goldman Sachs. 

Among the first 10 companies UVF invested in, at least one — Omniture (NASDAQ: OMTR) – has experienced a financial exit, specifically through an initial public offering.

For about the 15-billionth time, Politis Communications took at least one of its clients to a ShowStoppers Media Reception at a major trade show. And once again the results were awesome!

This year, we had three clients at the Showstoppers-produced event — HandHeld Entertainment, HobbyTron.com and ifrogz – which was held for the second year in a row at the Wynn Resort & Casino. Very classy!

Showstoppers lined-up roughly 100 companies as co-sponsors of the event, which was crazy enough. But at last count, Showstoppers had more than 1,000 RSVPs from tech journalists and analysts prior to the event.

For its part, Showstoppers put on a fantabulous event. The food was wonderful and plentiful, there were plenty of watering holes placed throughout the ballroom, and they had even gone to the trouble to make arrangements to broadcast the NCAA D-I National Championship Football game between Ohio State and the University of Florida on screens hanging from the ceiling in the middle of the hall. A nice touch for college football fanatics like myself.

At the end of it all, each of our three clients made great contacts at the show, with several nice stories already published/broadcast.

At the end of the day, I will continue to A) recommend media receptions for clients as a very cost-effective and efficient way of meeting a lot of journalists and analysts at one time, and B) definitely recommend Showstoppers as my favorite media reception producers.

Good job, Showstoppers!

Not only is it hard to imagine that 2006 has come and gone, but it’s also mind-bending to realize that CES starts this coming Monday.

With the death of COMDEX (the COMputer Dealer EXposition) a few years back, the annual Consumer Electronics Show has now become the largest technology tradeshow in the United States, if not the world.

Slated this year for January 8-11 in Las Vegas, CES will attract a truly worldwide audience of manufacturers, distributors, engineers, marketers, retailers, gawkers and more to the annual geek fest in glitter gulch. Oh yes, and journalists galore — probably 5,000+ this year coming from places as widespread and diverse as Salt Lake City and Singapore.

Based upon last year’s attendance figures, I will not be surprised to see total attendance surpass 200,000 unique visitors to CES this year.

As for me, I’m headed down to slot-machine city on Sunday with several members of the Politis Communications crew and major media events slated for both Sunday and Monday nights.

Look for more on CES between now and mid-January.

Perhaps only one person has had a greater imprint on Novell than Ray Noorda.

That person? Jack Messman.

Nevertheless, Novell announced yesterday (6/22/06) that current Novell President, Ron Hovsepian, has been given the additional title of chief executive officer, with board member Thomas Plaskett elected as non-executive chairman of the board. According to the release, Messman has relinquished his roles as CEO and chairman of the board, but he will remain on the board until Halloween Day (10/31) 2006.

NOTE: CFO Joseph Tibbets also stepped down at the same time. In fact, a closer read of the release (specifically, the fact that the release was distributed at 7 a.m. on 6/22 and that it said [speaking of Messman and Tibbets], “will leave Novell’s employment, effective June 21″) suggests to me that they were given the boot in a board meeting the prior evening . . . but that’s pure speculation on my part.

Anyway . . . a Novell director since 1985, Messman became the company’s president and CEO in July 2001 when Novell acquired Cambridge Technology Partners, an acquisition valued at $266 million when it was first disclosed in March 2001. Messman was then named Novell’s chairman of the board in November 2001.

On the day that the Cambridge acquisition was completed and Messman became president and CEO (July 10, 2001), Novell’s stock closed at $4.87 per share. Today’s closing price? $6.55 per share, up $0.55 on today’s news.

Along the way, Novell’s shares have closed as low as $3.11 per share on 6/30/03 and as high as $14.06 on 2/3/04.

It was under Messman’s leadership that the company moved its headquarters to Boston. Messman was also at the helm when the company decided to move strongly into the open source and Linux marketplace, including its move to acquire SuSe. And these moves appeared to be working.

However, Wall Street was surprised earlier this year on 3/2/06 when the company annouced Q1 2006 results that were not as expected. The result, a nearly 37 million shares traded hands the next day with the stock dropping $1.63 per share (approximately 17 percent) to close at $7.90, down from $9.53.

With approximately 339 million shares outstanding, it amounted to a $550 million drop in Novell’s market capitalization in one day.

The 5/31/06 announcement of the Q2 2006 results (ended 4/30/06) saw a similar drop-off, with Novell’s closing share price dropping $1.13 per share to $6.60 from $7.73, a 14.6 percent one-day selloff or an additional loss of $383 million in market cap.

Except the price kept heading downward. During the following two weeks the per share price continued to erode, closing at $5.84 on both June 15 and 20, or a two-week loss of $1.89 per share or a total market valuation loss of $640 million.

And . . . if you take the delta between the 3/2/06 closing share price of $9.53 and the 6/15/06 and 6/20/06 closing prices of $5.84, now we’re talking about a drop of more than 38 percent in less than four months. A market cap erosion of $1.25 billion.

My guess is that at that point, the board said, “It’s time for a change.”

I’m sure that there was a lot more that was going on behind this decision. I’m also not suggesting that the recent market surprises were the only reasons for Messman’s departure.

But with more than 21 years as a Novell board member under his belt, Messman has had probably more influence on Novell’s direction, success and failures than any other person, save perhaps Ray Noorda.

And soon Messman will be permanently out of the Novell spotlight too.

So what’s next for Novell minus Messman? That remains to be seen.