Dell Inc. Chairman and founder Michael Dell defended his hand-picked successor's work at the world's largest PC maker Tuesday, saying Kevin Rollins isn't solely to blame for the company's recent missteps.
The company has been battered in the last month by a recall of 4.1 million potentially flammable notebook batteries made by Sony Corp. and by disappointing earnings.
On Monday, Dell delayed filing its fiscal second-quarter financial report and suspended its share repurchase program because of an ongoing federal accounting probe.
"Characterizations of the company's challenges as being only Kevin's are inaccurate," Michael Dell, standing next to Rollins, told investors meeting in New York on Tuesday. "We believe we have a very strong team at our company. I think any press speculation on that is completely useless, but feel free to speculate 'cause everyone else does. It's not going to happen."
The brief comments were made following a presentation by Rollins in which he outlined a series of initiatives to bolster the company's business called "Dell 2.0."
Though lacking many specifics, the plan would shift the company's focus away from cheap products to put more emphasis on services, customer satisfaction and product design.
"This is a journey that we're on with our customers," Rollins said. "We know we've not done this perfectly in the past. But the Dell experience is the No. 1 priority."
Historically, Dell has gained market share by selling cheap computer systems directly to consumers and businesses. And though Dell still leads in PC market share, over time the direct-sales model price advantage has foundered amid competition from Hewlett-Packard Co., Lenovo Group and others.
"Dell 2.0 is about evolving, not about revolution," Rollins said.
In other announcements, Rollins said the company had extended a partnership with EMC Corp. to sell customized networked storage devices through 2011. The deal was described as a multibillion dollar alliance, but exact financial terms weren't released.
Company officials also announced plans to ship PCs featuring Blu-ray optical drives by the end of the year.
Michael Dell, meanwhile, said the company was fully cooperating with the Nasdaq Stock Market and the Securities and Exchange Commission over the accounting probe that forced the company to postpone the filing of its earnings.
Tuesday's so-called "Dell Technology Day" was meant to kick off its annual analysts meeting Wednesday, but that meeting was canceled due to the filing issue.
The Round Rock, Texas, company said Monday that SEC and internal investigations have shown it may have misstated prior financial reports, including issues relating to accruals, reserves and other balance sheet items.
It also disclosed that the U.S. Attorney for the Southern District of New York had subpoenaed documents related to its financial reporting from 2002 to the present.
"There's really not a whole lot more comment to make," Dell said. "We fully expect to get this issue resolved."
The company said it plans to file the second-quarter report soon but didn't offer a more specific timetable. Third-quarter earnings are scheduled to be posted Nov. 16.
Dell said the upfront costs of implementing the Dell 2.0 initiatives will pay off -- but only in the long run.
"It's pretty clear we're making a number of investments which will not have a positive impact on the company's earnings in the near term," Dell said. "We're treating the company as if we are owners, because we are."
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