What is going on with Dell these days?
The owners of 378 million shares withheld their support from Michael Dell's re-election as chairman of the board of the company that bears his surname.
That reminds me of the brouhaha at Disney in the period 2003-2005.
But what is the "big picture" at Dell? My understanding is that its core business remains the sale of "the box," the physical computer you stick on top of your desk. It typically has Intel's chips, and MS software. Furthermore, since the selling of boxes is competitive, whereas both the software and the chip making markets have a single dominant firm each, most of the profit goes to Microtel. Dell's core business has a slim margin.
Accordingly, in recent years, Dell has tried to branch out into non-core areas where it might be less tightly squeezed. Last year, Dell bought Perot Systems, a provider of a wide range of IT services.
There's also this.
It seems to me that the missteps that led to investor dissatisfaction, and all those withheld votes, have to be understood in this context. Dell is changing course, and there will be some stumbling as a result of such a change. The right thing to do, nonetheless, is to persist.
Showing posts with label Michael Eisner. Show all posts
Showing posts with label Michael Eisner. Show all posts
Wednesday, August 18, 2010
Sunday, March 2, 2008
The New York Times
It's on. The proxy fight is official.
The Times' January results show a steep drop in advertising sales and a weakening of online growth, and that led S&P to indicate that it may downgrade the NYT's credit rating.
It went further, S&P's statement said, "the downgrade may not be limited to one notch." How ominous is that?
This will certainly feed the rebellion by the Harbinger-Firebrand group, which has now put forward four nominees for the board of directors.
The rebels' problem is that the New York Times board is designed so as to perpetuate the control of the Ochs-Sulzberger clan. Class A stock, which is the sort Harbinger etc. own, can elect only up to four members of the board. The rest of the 13-member body is determined by Class B stock, which is privately held. In fact, 88% of the Class B stock is held by members of the controlling family.
This is the sort of self-perpetuating elitist structure that would normally be denounced in the editorial pages of, say, The New York Times.
Cheap irony to the side, though, there are ways of losing these things even when the fix seems to be in. Think of the way Eisner was run out of Disney.
More on this tomorrow.
The Times' January results show a steep drop in advertising sales and a weakening of online growth, and that led S&P to indicate that it may downgrade the NYT's credit rating.
It went further, S&P's statement said, "the downgrade may not be limited to one notch." How ominous is that?
This will certainly feed the rebellion by the Harbinger-Firebrand group, which has now put forward four nominees for the board of directors.
The rebels' problem is that the New York Times board is designed so as to perpetuate the control of the Ochs-Sulzberger clan. Class A stock, which is the sort Harbinger etc. own, can elect only up to four members of the board. The rest of the 13-member body is determined by Class B stock, which is privately held. In fact, 88% of the Class B stock is held by members of the controlling family.
This is the sort of self-perpetuating elitist structure that would normally be denounced in the editorial pages of, say, The New York Times.
Cheap irony to the side, though, there are ways of losing these things even when the fix seems to be in. Think of the way Eisner was run out of Disney.
More on this tomorrow.
Monday, November 19, 2007
Votes to Withhold
Suppose the incumbent directors of a company are running unopposed for re-election. For whatever combination of reasons, opposition has developed too late to meet the deadline for the filing of an alternative slate. But, now, opposition HAS developed.
Is there any significant manner in which it may express itself? Yes.
Stockholders may withhold their votes (or, as it is sometimes put, they may vote Withhold). Sometimes an impressive showing in a vote-withhold campaign will make the point.
The already-classic example of this played out at Disney in 2004 - 2005. It was in March of the first of those years that Disney's shareholders withheld 43% of the votes for the re-election of Michael Eisner as a member of the board.
The campaign that achieved this result was led largely by Roy Disney, Walt's nephew. Eisner remained on the board, but the other members reacted to the 43% vote by stripping him of the chairmanship. He stepped down as CEO a little more than a year later.
This comes to mind right now because I've been following the aftermath of a shareholders meeting at a company somewhat less visible than Disney: at Sparton Corp., a Michigan based manufacturer of circuit boards. There was a withhold campaign here, too.
in August one activist investor declared in a letter that he has "become increasingly troubled by the Board's inaction and acquiescence to Sparton's perennially underperforming management team—a team that has presided over a decades-long decline in both the Company's book and stock values." The meeting took place in October.
That investor, Andrew Shapiro, told me when I interviewed him early this month that he has been somewhat surprised that Sparton hasn't yet disclosed the size of the "withhold" vote, though he infers from what the company has disclosed that the number is 30%.
He also advocates what one might call a stand on fiduciary principle -- the members of the board should press the CEO to doff his other hat, as trustee of the Sparton Defined Benefit Pension Plan. This is a conflict: the pension plan has over-invested in Sparton common stock, Shapiro contends. This in turn has contributed to the entrenchment of the incumbent board.
Although the spelling of the company's name isn't quite right for it, I did try to work in some reference to a stand at Thermopylae in this blog entry. Really I did. I couldn't bring it off, though, unless this meta-reference counts.
Is there any significant manner in which it may express itself? Yes.
Stockholders may withhold their votes (or, as it is sometimes put, they may vote Withhold). Sometimes an impressive showing in a vote-withhold campaign will make the point.
The already-classic example of this played out at Disney in 2004 - 2005. It was in March of the first of those years that Disney's shareholders withheld 43% of the votes for the re-election of Michael Eisner as a member of the board.
The campaign that achieved this result was led largely by Roy Disney, Walt's nephew. Eisner remained on the board, but the other members reacted to the 43% vote by stripping him of the chairmanship. He stepped down as CEO a little more than a year later.
This comes to mind right now because I've been following the aftermath of a shareholders meeting at a company somewhat less visible than Disney: at Sparton Corp., a Michigan based manufacturer of circuit boards. There was a withhold campaign here, too.
in August one activist investor declared in a letter that he has "become increasingly troubled by the Board's inaction and acquiescence to Sparton's perennially underperforming management team—a team that has presided over a decades-long decline in both the Company's book and stock values." The meeting took place in October.
That investor, Andrew Shapiro, told me when I interviewed him early this month that he has been somewhat surprised that Sparton hasn't yet disclosed the size of the "withhold" vote, though he infers from what the company has disclosed that the number is 30%.
He also advocates what one might call a stand on fiduciary principle -- the members of the board should press the CEO to doff his other hat, as trustee of the Sparton Defined Benefit Pension Plan. This is a conflict: the pension plan has over-invested in Sparton common stock, Shapiro contends. This in turn has contributed to the entrenchment of the incumbent board.
Although the spelling of the company's name isn't quite right for it, I did try to work in some reference to a stand at Thermopylae in this blog entry. Really I did. I couldn't bring it off, though, unless this meta-reference counts.
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