Naive shareholders taken for a ride?

A few recent corporate governance transactions are worrying. Is this evidence of a new variant of the old principal/agent conflict? This conflict occurs when the CEO (agent) and the owners (principal) of the company have different interests? Here are two recent examples:

• Dell. Michael Dell CEO of Dell drives the share price of Dell down by poor management. Then he makes a bid for the whole company together with a private equity consortium. Michael Dell will remain as CEO and now he will be able to turn around the company that he was not able to turn around in the preceding years. Comment: If Mr Dell will be so good at fixing Dell, why couldn't he fix the company when he was CEO? His claim that the stock market would not allow him to take the necessary actions is just not credible
• Nokia. Stephen Elop CEO of Nokia and a former high level executive at Microsoft stops development of Nokia's Symbian operating system and focuses on the Windows Phone. Before Nokia has staged a turnaround, he negotiates a sale of Nokia's mobile phone division to Microsoft. Microsoft gets the mobile phone division cheaply and Elop moves back to Microsoft. Comment: Nokia and Microsoft are in the same boat and both need the Windows smartphone to be a success. Why would Mr Elop sell the mobile phone business to Microsoft before the Nokia turnaround is complete? It is true that Nokia is dependent on Microsoft, but the reverse is equally true. Why is it good for Nokia's shareholders that Mr Elop completes the turnaround after being hired by Microsoft?

Does Dell have a sound strategy?

A consortium headed my Michael Dell is trying to take Dell private. Before the recent surge in share price the company was down 64% (under-performing index with 57%) since Michael Dell took over as CEO in February 2007. Taking the recent bid from the consortium into account, the company is down 44% (under-performing index with 49%). A cynic would argue that Michael Dell ran the company into the ground, just to be able to buy it back at a cheaper price.

Corporate strategy. Dell has tried to develop its corporate strategy in the direction of becoming an information technology services company; gradually moving away from its focus on selling personal computers. However, to succeed Dell has to get each business unit strategy right. Dell's segment reporting is focused on customer groups and not products so it is not so easy to assess the quality of its business strategies.