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Carl Icahn still fighting hard for Dell

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May 15, 2013

In an unusual decision, Texas computer maker Dell will report five days in advance its fiscal Q1 financials amid an escalating fight between its CEO Michael Dell, and Wall Street activist and corporate raider Carl Icahn over the future ownership of the company.

Dell has confirmed late yesterday that it scheduled a conference call with analysts tomorrow May 16, indicating that the company's numbers could potentially fall way short of the Street's more positive forecasts.

But Dell made no further mention as to why this is happening earlier than planned and Dell refused to comment. According to estimates by the Wall Street Journal, Dell may post sales of about $14 billion, and earnings from operations of $600 million.

In 2012, Dell turned over $14.4 billion and made an operating profit of $824 million. Times have been rough lately in the PC and server market, and Dell isn't the only company that has been affected. Dell's main rival HP has seen its sales fall a lot in the last twelve months as well.

In February of this year, Dell founder and CEO Michael Dell tabled a $24.4 billion bid to take the company private again, with a lot of help from Silver Lake Partners and even a loan from Microsoft, one of Dell's longtime industry partners.

Dell is rapidly losing ground in the device market to Apple and Samsung as consumers switch to tablets and smartphones, and enterprises extend corporate refresh cycles. Windows XP is a good example of how companies are trying to stretch their IT budgets to the maximum, as Microsoft said it will stop supporting the aging OS in 2014.

Dell is trying to transform itself into a enterprise tech player to replace those declining PC revenues, and to date has bet more than $13 billion on acquisitions to help it get there.

But it'd probably be wiser not to let this play out under the glare of Wall Street's gurus or under the noses of rivals, so de-listing with a new ownership structure is the plan.

Major stakeholder Carl Icahn is very unhappy with the current offer from Dell and his partners, and has vowed to fight this battle to the end. It will be interesting to see how this pans out in the next few weeks. We will keep you posted.

In other IT news

Flash storage provider OCZ CEO Ralph Schmitt has replaced almost twelve of his top executives, and he's now talking about overall quality as he tries to rejuvenate the now almost defunct OCZ flash business.

To a large degree, OCZ actually over-extended itself in a big way under its original founder and previous CEO Ryan Petersen, who was asked to let go last year, leaving the company with far too many under-performing SSD product brands.

Many of those brands had a bad history of product quality problems and caused some serious financial issues to OCZ as a company.

Schmitt is now fighting to keep OCZ's Nasdaq listing in the face of a failure to file the last two quarter's financial results with the SEC and to rebuild the battered company.

The company is trying to rebuild itself after a loan agreement with Hercules Technology Growth Capital gave it a last-minute $30 million cash infusion and some credit lifeline.

The terms of the loan agreement are partially contingent upon the company being current in its SEC filings and achieving certain revenue levels for two consecutive quarters.

IT has seen a copy of an OCZ presentation for customers discussing the OCZ Quality System as of Q2 2013. It declares: "There is no substitute for quality. Its created, maintained, and improved upon every day by every employee in the company."

In the document is also a list of new people as evidence of OCZ's new found zeal for quality control and increased revenues:

  • New VP Engineering
  • New VP of Operations
  • New VP Global Sales
  • New Director of Quality
  • New Senior Manager Quality Systems
  • New Director of Product Engineering
  • New Director of Software Engineering
  • New Manager Test Engineering
  • New Manager Product Compliance
  • New Director Enterprise Sales
  • New Director OEM Sales
  • There is more on the improvement of in-house manufacturing as well as new quality control measures and vendor and supplier monitoring processes and then a review of how OCZ's Vertex product quality has improved over three generations of product.

    Some observers in the IT industry say that Schmitt deserves a commendation for trying hard to rescue OCZ from its demise, and he probably does.

    In other IT news

    Late last year, Intel launched its new line of Centerton server processors, the first in its new series of Atom-based server processors designed for lower-power, less intensive applications. In an effort to cut down seriously on ARM's near invasion of the data centre as of late, Intel's new low-power server processors are targeted at an emerging "Metal as a Service" (MaaS) iteration that sees a return of unique and fairly stable workloads to individual server processors mounted on the same motherboard.

    Sun Hosting provided us a Supermicro test unit in the small 101i mini-ITX chassis. This particular motherboard and chassis was our idea in the first place. Supermicro showed us its new "display computer" based on this chassis, but for various reasons we were far more interested in the idea of an IPMI-enabled microserver in a chassis with a VESA mounting kit.

    We like the server chassis a lot. A mini-ITX core-series motherboard in this unit would be the sort of server we'd buy in bulk. The Centerton S1260 has a max TDP of 8.5 watts. The whole system, when redlined, doesn't hit 20 Watts of power.

    The chassis itself takes DC power from an external adapter. This makes using a larger, more efficient power supply to handle multiple units easier.

    Source: Dell Inc.

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