Glowing article in Forbes...
forbes.com
If our list of the 25 fastest-growing big companies had been published in 1999, it would have looked much different. Companies like Cisco Systems, Sun Microsystems and Oracle would have made the cut. But today there are only two big tech companies growing quickly enough to make our list: Dell Computer and Microsoft.
Dell, which is changing its name to Dell Inc. to reflect diversification beyond PCs, can seemingly do no wrong. It has gained market share and increased sales and profits through the worst technology-spending slump in its 17-year history. Competitors privately gripe that Dell walks around with a halo, garnering nothing but glowingly positive news and analyst reports. Unfortunately for them, the praise is justified.
Dell, number 16 on our list, has met or beat Wall Street estimates for nine consecutive quarters. For the March calendar quarter, the company's PC unit shipments grew by 24% year over year, while the overall market was up only 5.5%. Its costs are less than 10% of revenue, half of most of its competitors.
Its new data storage business, through a sales partnership with EMC, is expected to more than double from 2002 levels in this fiscal year to $1.5 billion in sales. Storage is part of Dell's so-called enterprise business, which is doing well but does have some soft spots. Networking products, for example, pulled down only $35 million in sales in 2003, according to Merrill Lynch. The segment is expected to grow rapidly, to $127 million in fiscal 2004, but will be a tiny percentage of overall sales.
Still, Merrill's Steve Milunovich says that long term, 15% earnings growth "appears realistic." He is also expecting revenue growth of 16% for 2004, which follows 14% growth in 2003.
The usual dig against Dell is that because it is not a technology company--it spends only 1.2% of sales on R&D, compared with 16% for Sun and 6% for both Hewlett-Packard and IBM --and won't be able to meet the needs of the most demanding corporate customers. While that could possibly derail Dell down the road, that concern now appears overblown, as evidenced by the company's market share gains in servers and storage. Some industry watchers believe that Dell's market share in PCs, its core business, could eventually hit 30%, up from 17% today.
While most tech companies were downbeat or at least cautious on the environment last week, Dell President Kevin Rollins said that after another positive performance anybody "would be hard-pressed to find any area of weakness."
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Bottom line, Microsoft will have a harder time maintaining high double-digit growth, which could leave Dell carrying the flag for the tech sector.
Sweet. |
