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12/31/2008
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Dell Unveils Massive Reorganization

To try to stem declining revenue and profits, the PC maker will change its business sales and marketing approach from a regional to a global strategy.

Dell, which has seen PC sales slow in the economic downturn, announced on Wednesday a massive reorganization that establishes three separate global units for selling to businesses and government agencies.

In addition, the world's second-largest computer maker said Mike Cannon, president of global operations, would retire effective Jan. 31; and Mark Jarvis, chief marketing officer, would leave during the current fiscal quarter. However, Cannon and Jarvis would continue to be involved with the company as consultants.

The reorganization, announced about a month after Dell reported a drop in revenue and profits as a result of slowing sales for servers and PCs, changes the company's approach in selling to businesses and government from a regional to a global strategy. Dell this year adopted a global approach in its consumer business, led by Ron Garriques.

The latest move establishes three worldwide business units, one targeting large companies; another focused on the public sector, which includes government and education; and the third on small and medium-sized businesses.

"We have laid the foundation for the transition from a global business that's run regionally to businesses that are really globally organized," Michael Dell, chairman, chief executive, and founder of the company, said in a statement.

Steve Schuckenbrock, currently president of global services and CIO, will lead the sales effort to large corporations, and Paul Bell, currently president of Dell Americas, will head the public-sector business unit. Leading the SMB sales operation will be Steve Felice, currently president of Dell Asia-Pacific and Japan.

The company plans to align its financial reporting with the new structure during the first half of fiscal year 2010, which begins in February.

Meanwhile, the company said Cannon will be succeeded by Jeff Clarke, who will become vice chairman of global operations while continuing to head Dell's business client product group. Jarvis will be succeeded by Erin Nelson, who was VP of marketing for Dell in Europe, the Middle East, and Africa.

Dell in November reported that profits in the fiscal third quarter fell to $727 million from $766 million the same period a year ago, as revenue fell more than 3% to $15.2 billion. Dell blamed the drops on lower sales across the globe.

Dell's dependency on the PC market makes the company particularly vulnerable to weakening demand in the current economic recession. Dell released its latest earnings the same day iSuppli slashed its 2009 forecast for PC shipments by nearly two-thirds because of rapidly deteriorating conditions in the global economy.

At the same time, Dell is struggling to regain market share from its rival Hewlett-Packard, the world's largest computer maker. HP in November reported fiscal fourth-quarter earnings that exceeded Wall Street forecasts.

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