Dell Searches for a Lift

4:45 PM -- Instead of the new pilot many of its detractors have called for, Dell has added a CFO who used to run an airline. (See Dell Swaps CFOs.)

Dell's former CFO James Schneider has left amid accounting and regulatory problems at the company. His replacement is Don Carty, former CEO of American Airlines. Carty has been on Dell's board since 1992 and is chairman of its audit committee.

Although Dell says Schneider left voluntarily to become chairman of bank holding firm Frontier Bancshares, Wall Street analysts credit the company for making the change in an attempt to solve its accounting and regulatory woes. (See Dark Days at Dell.)

But the move also raises questions:

Shawn Wu of American Technology Research calls the news mixed. "On the positive, we are pleased to see Dell take further steps in fixing its problems, this time with management changes surrounding its accounting irregularities," he wrote in a note to clients today.What's the downside? "We are not sure if Carty is the best choice as he has been a Dell board member since 1992 and was the audit committee chairman who oversaw financial activities that are now in question by the SEC," Wu writes. "Frankly, we are not sure if naming an existing member allows Dell to restart with a clean slate. For now, Kevin Rollins remains CEO; however, we would not be surprised to see further changes should Dell not make progress over the next couple quarters."

Dan Renouard of R.W. Baird questions the timing of the move, coming as it does while the SEC and the U.S. attorney for the Southern District of New York are looking into Dell's finances. Also, Nasdaq notified Dell in September that it is out of compliance and could face de-listing because it is late filing quarterly earnings. (See Dell Gives Numbers, Not Answers.)

"We believe [the] fairly abrupt management departure, amidst regulatory investigations, raises more questions concerning integrity of financial statements," Renouard wrote in a research note.

Maybe Carty, Rollins, and chairman Michael Dell will provide the answers to get Dell back on track. But the early days of 2007 will bring the kind of turbulence that likely would have kept the airplanes at Carty's old company from taking off.

Dave Raffo, News Editor, Byte and Switch