How a homegrown geek outsourced, downsized, and tax-breaked his way to the top.
Read also: Kevin Drum on the decline of Big Labor, the rise of Big Business, and why the Obama era fizzled so soon.
Before he became the 15th-richest American, Michael Dell was hailed as a corporate wunderkind. His eponymous computer company's "dazzlingly efficient" factory in Austin, Texas, "may be the best hope of keeping blue-collar jobs in the United States," proclaimed the New York Times in 2004. Recently, Dell Inc. has been better known for gobbling up federal contracts and pulling financial shenanigans to line its executives' pockets—all while exploiting tax loopholes, outsourcing production, and laying off American workers.
1984
19-year-old Michael Dell builds and sells computers from his University of Texas-Austin dorm room. He drops out, and by 1987 Dell Computer's sales hit $60 million.
1992
At 27, Dell becomes the youngest CEO to ever make the Fortune 500.
1993
Dell Inc. builds its HQ in an Austin suburb, lured by sales-tax rebates, property-tax cuts, and $50 million in tax-free financing. Austin's mayor calls Dell, known for his "made in the USA" computers, "a model corporate citizen."
1997
Dell and his wife, Susan, build a $30 million, 33,000- square-foot granite and stainless-steel mansion with 8 bedrooms, a gym, an indoor pool, and (reportedly) 21 bathrooms. Dubbed "the castle" for its elaborate security, it's appraised at $22 million; the Dells argue it's worth only $6.5 million, and the county eventually settles at $12 million.
Feds fine (PDF) Dell Inc. $50,000 for selling computers in Iran in violation of sanctions.
1998
Michael Dell forms a private-equity firm, MSD Capital, to manage his family's money. Today, their $12 billion in assets include a $100 million collection of Magnum photos; Dollar Rent-a-Car; real estate in Hawaii, Mexico, and California; and the companies that run Applebee's, IHOP, and Domino's.
Dell Inc. opens a production and sales center in China, overseen by a subsidiary. By 2010, it has subsidiaries in 77 countries, including holding companies in tax shelters such as Bermuda and the Caymans that allow it to avoid at least $3.7 billion in US taxes. In 2010, it paid an effective tax rate of 7.5% on its foreign income.
1999
Dell Inc. gets an estimated $200 million in city and state incentives to build a factory in Nashville, Tenn. Three years later, half of the plant's jobs are relocated to a nearby town, where Dell gets $6 million in tax breaks.
George W. Bush names Michael Dell to head his campaign's information technology advisory council.
Dell Inc. becomes the country's top PC seller. Dell writes the bestselling Direct From Dell: Strategies That Revolutionized an Industry.
2000
Dell Inc.'s stock price hits all-time high.
The New York Times declares Michael Dell the richest Texan ever. (He's now No. 2.)
Dell buys two ranches outside Austin for an estimated $75 million. One gets its property taxes slashed 99.8% by claiming an agricultural exemption (proof: turkey feeders, birdhouses, and deer "habitat control"). Recently asked by Time about reducing his carbon footprint, Dell answered, "I'm sequestering way, way more than I'm using. I have a lot of land and a lot of trees."
Dell and his wife give $250,000 to the Republican National Committee.
2001
Susan Dell's personal fashion label, Phi, makes Jenna and Barbara Bush's inaugural gowns.
President Bush appoints Dell to his President's Council of Advisors on Science and Technology, which warns that outsourcing is destroying the US tech industry.
Dell builds a four-story villa on the exclusive Caribbean island of Anguilla.
2003
Dell Inc. replaces its call-center employees with part-time temps. Annual turnover soars to 300%.
The Michael and Susan Dell Foundation gives $250,000 to a charity run by then-House Majority Leader Tom DeLay (R-Texas), who's later convicted of illegally funneling corporate money to candidates.
The "Dell Dude" actor is busted for pot possession.
2004
Dell Inc. employs more workers overseas (23,800) than it does in the US (22,200).
After heavy lobbying by Dell Inc., Congress passes the American Jobs Creation Act, which lets US companies "repatriate" overseas profits at a one-time tax rate of 5.25%, rather than the normal 35%. The company brings home $4 billion.
2005
Michael and Susan Dell give $250,000 for President Bush's second inaugural celebration.
2006
President Bush: "It's tough in a time of war, when people see carnage on their Dell television screens."
Dell Inc. recalls 4.1 million fire-prone laptop batteries.
Dell Inc. discloses that it's been audited by the SEC, says it won't reveal details of any "misconduct," but revises four years' worth of financials.
Dell Inc. says it's doubling its factory and call-center staff in India to 20,000.
2007
Michael Dell returns as CEO after a three-year hiatus. Less than six months later, his compensation exceeds $153 million, making him the sixth-highest-paid CEO in the US. His benefits include more than $1 million for security, second only to Oracle's Larry Ellison.
By year's end, Dell Inc. announces 8,800 layoffs, about 10 percent of its global workforce.
Investors sue Dell Inc.'s executives, alleging inflated profits and billions in secret kickbacks from chip maker Intel. The company will settle for $40 million.
Customer service employees file a class-action lawsuit claiming that Dell Inc. routinely underpaid them. The case also is settled out of court.
New York Attorney General Andrew Cuomo sues Dell Inc. for luring customers into expensive finance plans. In 2009, Dell Inc. settles another case with 34 state AGs and agrees to reform its marketing and financing practices.
2008
Dell Inc. announces $3 billion in cuts, including the closure of an Austin plant, eliminating 900 jobs. It imposes a hiring freeze, offers buyouts, and asks workers to take unpaid days off.
Read Full Article »