Dell's New Blood: Cannon, Now Garriques

Michael Dell welcomes another senior exec, tabbing Motorola's Ron Garriques to lead consumer electronics one day after adding Solectron's Michael Cannon

by Arik Hesseldahl

Continuing what appears to be an aggressive pace of shakeups among senior management, computer maker Dell (DELL) tapped the head of Motorola's (MOT) handset division to run its consumer electronics unit.

Ron Garriques, a nine-year veteran of Motorola, had been in charge of its mobile devices group. This unit had been the star of the company before recently hitting snags amid declining prices for handsets.

Word of Garriques' departure from Motorola for Dell comes only a day after Michael Dell, less than three weeks into his second stint as the company's chief executive officer, tapped Solectron CEO Michael Cannon to head up Dell's global manufacturing and procurement operations, a new position.

The new hires are only the latest in a series of management changes that have hit Dell in the last few months. On Dec. 19, the company replaced Chief Financial Officer James Schneider with Donald Carty, the former head of AMR (AMR) and a Dell director.

Cannon, who starts on Feb. 26, is known best for his two stints helming Solectron (SLR), the contract electronics manufacturer, and prior to that, Maxtor, a hard-drive manufacturer that was acquired by Seagate (STX) in late 2005. In both cases he fought to turn around two large and troubled technology companies; with Dell, he's poised to try it a third time (see BusinessWeek.com, 2/1/07, "Is Dell Too Big for Michael Dell?").

Cannon, 55, is an old hand at running operations with thin profit margins, squeezing them to improve efficiency and cost structures. But having held the top job at two large companies, why take a step down in seniority, especially when Michael Dell, 41, has made it clear that he's not going to relinquish the CEO title any time soon? Cannon didn't reply to an e-mail seeking comment, and Dell declined to make him available for an interview. But it's pretty clear what the benefits might be for Cannon, if he's able to turn Dell around. Still trading at pretty close to a five-year low, an improvement in Dell's stock—which would likely make up the bulk of Cannon's compensation package—has nowhere to go but up.

But as Cannon takes control of Dell's global operations—essentially becoming Dell's de facto chief operations officer—it is revealing to look closely at his track record. At Maxtor, he helped resuscitate the drive-maker and establish some consumer products that paved the way for its purchase by Seagate in late 2005.

Streamlining Solectron

When Cannon assumed the lead at Solectron, he had wandered into a bloated mess. The Milpitas (Calif.) company, founded in 1977, had defined the concept of contract manufacturing, essentially making products for companies that couldn't afford the expense of owning and operating their own plants. Revenues grew quickly, from $300 million in 1989 to $8.4 billion in 1999. Ironically, the sector probably benefited from Dell and its pioneering just-in-time-manufacturing process that put the squeeze on dozens of computer makers. To match Dell, rivals started to turn to contract manufacturers like Solectron, as well as overseas rivals such as Compal and Quanta Computer, both of Taiwan.

When Cannon took over in 2003, Solectron was suffering from a massive case of indigestion, having gone on an ill-advised acquisition binge of 32 companies. By 2002, as the telecommunications wipeout was well underway, Solectron's two biggest customers were Cisco Systems (CSCO) and Nortel Networks (NT). By the close of the 2002 fiscal year, Solectron's long-term debt had swollen to $3.2 billion, while sales fell from $18.7 billion in 2001 to $12.3 billion.