Tuesday, August 22, 2006


The Wall Street Journals "Heard on the Street" column is out saying that Wall St. is increasingly asking questions about Dell's (DELL) Kevin Rollins. Since Mr. Rollins became CEO in Jul'04, the world's largest PC maker by number of PCs shipped has hit a series of speed bumps. In the past 5 quarters, Dell has missed earnings and sales projections several times and posted disappointing financial results. On top of that, the co has grappled with poor customer service, personnel defections and the recall of 4.1m laptop batteries that potentially could overheat and burst into flames. Overall, co's once-robust stock is down about 60% since Mr. Rollins took over. Now, the Street is openly wondering if the fault for Dell's woes lies with the CEO. Some large institutional investors have sold Dell stock, including Fidelity Investments, Wellington Mgmt, and OppenheimerFunds. "Clearly, [Mr. Rollins] has to take some responsibility," says Sunil Reddy, a fund manager at Fifth Third Asset Mgmt unit of Cincinnati's Fifth Third Bancorp, which manages $22bn. While Mr. Reddy says his funds don't own Dell stock, Fifth Third had about 442K Dell shares as of late Jun. Andrew Neff, of Bear Stearns, adds that Dell needs to get a "real sense of urgency. You're going to need that either from Kevin Rollins or his successor." And so far, Mr. Neff says, "you're not seeing that" from Mr. Rollins. The analyst rates Dell a Peer Perform.

According to the WSJ, an investor group including Harbert Mgmt reported a 10.2% stake in Gateway (GTW) and said it sent a letter to the co offering assistance in enhancing shareholder value. The move comes as Gateway has battled fierce competition and a lethargic stock price. Once a computer highflier known for its use of distinctive boxes spotted with cow markings, Gateway has a mkt cap of $543m. In the letter, the Harbert group said it was writing to request a meeting to discuss how it can assist in the co's effort to "drive the business and build value at Gateway." The group said, "We believe our backgrounds with consumer brands as founders, CEOs and strategic investors can add horsepower to your current efforts to recruit the best possible leadership."

According to the Barron's Online, US Mobility's (USMO) metrics are signaling "SOS" as the largest US paging co's subs and rev continue to fall drastically. But one hedge-fund manager isn't distressed. David Abrams, a USA Mobility director since Nov'04, disclosed that his fund Abrams Capital Partners and its investment partners have spent nearly $29.6m to purchase more than 1.4m shares in the open mkt from Aug. 11 through 16. SEC filings show Abrams Capital beneficially owns about 3.9m shares, or 14.4% of USA Mobility.

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