By Connie Guglielmo – Jun 3, 2010
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Michael S. Dell, chairman and chief executive officer of Dell Inc.,is considering taking the company private. Photographer: Andrew Harrer/Bloomberg

Dell Inc. Chief Executive Officer Michael Dell, who is more than three years into a turnaround effort at the world’s third-largest personal-computer maker, said he has considered taking the company private.

Speaking at a Sanford C. Bernstein & Co. conference in New York today, Dell declined to say what would prompt him to make the move. He said he has “every intention” of continuing to run the company and that growth-revival plans haven’t come to fruition.

“This transformation is incomplete,” Dell, 45, said. “If I had to give it a grade, it’d give it an incomplete.”

Dell retook the CEO position in 2007 after the company lost the top ranking in PC sales. He’s made more than 10 acquisitions and is eliminating jobs to spur earnings growth and diversify beyond PCs, which account for more than half of revenue.

The company’s turnaround has been hampered by rising costs for such components as memory and liquid-crystal displays. Gross profit margins have narrowed for two straight quarters, eroding the benefits of a rebound in business demand. Gross profit margin is the ratio of sales after deducting production costs to total revenue.

The component market “is still pretty tight,” Dell said today. He added that he doesn’t expect it to improve until early next year.

Pursuing Acquisitions

The company will continue to pursue acquisitions, with large deals less likely, and keep hiring salespeople, especially specialists in the services and storage markets that Dell is working to expand, he said.

Services accounts for about 13 percent of Dell’s revenue, while storage represents about 4 percent.

Dell’s acquisitions include the $3.9 billion buyout of services provider Perot Systems Corp. Since his return, Dell has also announced plans to cut more than 10,000 jobs and outsourced 53 percent of production as he shut factories to save money. He’s also moved the company into the smartphone and tablet- computer market.

“We’re in the midst of a transformation and we’re very focused on how we’re doing in that and what’s our progress and are people coming along in that and making the journey successfully,” Dell said.

Dell, based in Round Rock, Texas, rose 64 cents to $13.76 at 4 p.m. New York time in Nasdaq Stock Market trading. The stock has fallen 4.2 percent this year.

The company ranks behind Hewlett-Packard Co. and Acer Inc. in worldwide sales of PCs.