Analysts wonder: Is Dell Technologies setting stage for leadership changes?

Kara Carlson
Austin American-Statesman
Some industry analysts say Round Rock-based Dell Technologies could be formulating a succession plan to transition to new top leadership.

Could Dell Technologies be setting up a succession plan for its top leadership?

That's a question industry analysts are asking after the Round Rock-based technology giant recently announced it is adding a new co-chief operating officer. 

The new executive, Chuck Whitten, has worked as a consultant for Dell's leadership team in recent years through his previous employer Bain and Company, Dell Technologies said.

Dell Technologies said it has no plans to make changes to its CEO position, currently held by founder Michael Dell, and said its chief operating officer Jeff Clarke will remain on board as co-chief operating officer with Whitten.

"Michael isn’t going anywhere. Michael continues to serve as chairman and CEO and remains very involved, with ultimate accountability to stakeholders," the company said in a written statement.  "Jeff isn’t going anywhere. Co-COOs will provide immediate leadership capacity and speed decision making — allowing Dell to capture more opportunities." 

Dell Technologies was founded by Michael Dell in 1984. It is now one of the largest private employers in the Austin metro area.

Still, the addition of Whitten to Dell Technologies' executive team has some analysts speculating that the move could could be laying the groundwork for a leadership change, although that might still be months or years away.

"I think it's viewed by (Wall Street) as part of a potential succession plan for Michael Dell," said Dan Ives, an analyst with Wedbush Securities. 'I don't think they would make any changes in the near term, but Chuck, given his experience from Bain as well as his technology background, I think it was smart to elevate him to this position." 

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Patrick Moorhead, a technology industry analyst and founder of Austin-based consulting firm Moor Insights and Strategy, said adding Whitten to Dell's leadership team could open up a variety of possibilities. 

"There's a lot of potential things that could be going on here," Moorhead said. "You just don't know. Jeff may want to retire and Whitten takes over. Michael might want to retire and Jeff Clarke comes in and takes Michael's role and this gentleman takes Jeff's role. Or they both want to retire."

Moorhead said at a large technology company like Dell, having a number of strong leaders at the top is always wise.

"These things, at other companies, they really do happen all the time," Moorhead said. "You have to have a bench of potential people who can immediately come in." 

Dell Technologies recently named Chuck Whitten as the company's co-chief operating officer, along with current COO Jeff Clarke.

Roger Kay, an analyst with Endpoint Technologies Associates, said Whitten's arrival could be a signal that Jeff Clarke is considering leaving the company. 

"Making a co-COO is a little bit funny, in terms of title," Kay said. He said any changes would only come after Whitten had time to become settled in at the company. 

"There's a stability of a public company at stake and so you want to make sure that a transition is done in the right thoughtful way," Kay said. "That would mean, don't take out any of the support until everything that's new is fully assimilated and up and working so that you feel comfortable." 

Long-time leaders

Compared to many technology companies, Dell Technologies has had a reputation for stability in its leadership team. It one of the few tech companies founded in the "dawn of tech" in the 1980s that is still being run by its founder, Kay said. 

That has given the company continuity, Kay said, and Michael Dell has been unusual in remaining in a hands-on role in running the company, which is one of the largest private employers in the Austin metro area, with more than 10,000 workers in Central Texas. 

Michael Dell has remained heavily involved with the company since he founded it in 1984, serving as CEO for the majority of its history. He briefly stepped down as CEO in 2004, just after the company's 20th anniversary, although he maintained his role as chairman.  At the time, Dell was succeeded as CEO by Kevin Rollins, who had been the company's chief operating officer.

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Jeff Clarke, Dell Technologies' chief operating officer, speaks at an event in Austin in 2019.

Rollins resigned as CEO in 2007 and Michael Dell resume the top executive role. That year, a number of executives resigned amid a rough year for Dell. The company lost its lead of the overall PC market share to Hewlett-Packard and faced an investigation by the U.S. Securities and Exchange Commission over allegations of accounting improprieties. 

Clarke has also been with the company since its early days, joining in 1987 as a quality engineer, and has held a number of positions and leadership roles. He helped resurrect Dell's PC business in the 1990s and helped transform it into a market leader. In recent years he has since focused on driving sales growth and market strength for Dell's storage business. In 2018, he was leading Dell's Client Solution Groups when he was asking to take the reigns of Dell's Infrastructure Solutions Group as vice chairman of products and operations. In 2019, the role expanded when he took over as chief operating officer.  

"It's always good to have an energetic chief operating officer. (Clarke) has been one." Kay said. 

'It's new blood'

Dell Technologies is bringing Whitten in at a time when the company has "tremendous growth opportunity," Michael Dell said in announcing Whitten's hiring. The CEO said Whitten will help him and Clarke shape the company's future, and speed up customer outcomes. 

"Chuck's leadership, energy, knowledge and humanity make him the obvious choice to join our team and strengthen our industry leadership," Michael Dell said in a written statement.

Whitten comes to Dell from Bain and Company, a Boston-based management consultancy that regularly advises Fortune 500 CEOs on investment, mergers, acquisitions and other corporate strategies, where he worked for the last 22 years. His last decade was focused on technology, including Dell. 

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Bain and Company also the same firm that Dell has recruited executives from previously, including former CEO Rollins and Paul Bell, Dell's former president of public and large enterprise business. 

Ives said it's not surprising that Dell Technologies would again look to Bain and Company when adding to its executive team.

"It's a training ground for technology leaders," Ives said. "Many successful CEOs and executives have come out of Bain, so I think it makes a ton sense."   

Hiring Whitten could be an important addition to Dell Technologies' top leadership team as the company grows, Ives said. Dell is at something of a fork in the road as it tries to aggressively position itself within the cloud market, the next-gen data center market and spinning off VMWare. 

"It's new blood, a new way of thinking. He brings that supply chain mentality," Ives said. "And it's also about Dell being on the offensive, not the defensive."

'A lot to get done'

The addition of Whitten comes as Dell Technologies is coming off a strong financial performance in its most recent fiscal year, and the company is poised for more growth, analysts say.

Dell Technologies had revenue of $94.2 billion for the fiscal year ended Jan. 29, beating Wall Street's expectations. Those gains were fueled largely by booming demand for technology needed to work and attend school from home that was created by the coronavirus pandemic. Clarke said in a call with investors that the company was in a position to capitalize on continued growth opportunities. 

In recent years, Dell Technologies has moved away from being a computer-only business and into a more end-to-end technology provider. Dell consists of four business units —  its PC business, its hardware infrastructure company Dell EMC, its cybersecurity segment SecureWorks, and Virtustream for cloud software and services.

In October, the company said it was launching Project Apex, a new approach designed to simplify how customers and partners use Dell products, by implementing a consumption-based as-a-service strategy. The company aims to be a one-stop provider for on-demand technology offerings capable of changing as needed for the evolving business environment. 

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Moorhead said he expects Dell will continue to see strong demand as it grows its as-a-service model and as customers continue to buy products to fuel work from home and replace products that they bought during the pandemic.

"There's a lot to get done," Moorhead said. "Dell has a lot of ways to grow. What the board of directors wants and what Wall Street wants is to see the highest level of growth. There's a tremendous amount of opportunity. I think Dell  needs somebody to not only figure out what to do, but more importantly, the chief operating officer is going to make it happen."

As for how much longer Michael Dell and Clarke will continue to lead the company, Kay said that likely will be dictated more by their personal calendars than by the company's performance.

Regardless of any changes, Moorhead said, Michael Dell is sure to stay busy. 

"He just bought a stake in the (San Antonio) Spurs and he has major investments outside of Dell and outside of VMware," Moorhead said. "Someone like Michael Dell never really retires."