lod <<this is news?>> <<13:40 DJS Dell Sees Compaq's Turmoil As Opportunity To Increase Market Shar
13:40 DJS Dell Sees Compaq's Turmoil As Opportunity To Increase Market Share
NEW YORK -(Dow Jones)- Dell Computer Corp. Chief Executive Michael Dell
said Tuesday the recent turmoil at Compaq Computer Corp. has created the
"perfect competitive environment" for his company.
Dell (DELL), the No. 1 direct seller of personal computers, said Compaq
(CPQ), the world's top PC maker, is in "a sort of massive state of confusion"
and has "a fairly pronounced cost-structure problem."
Compaq has been struggling to improve its distribution system to better
compete with Dell's more efficient direct-sales strategy, and last week warned
it will post a wider-than-expected loss for the second quarter. Analysts have
faulted Compaq for not moving more quickly to implement a build-to-order plan,
something Dell and other PC makers have done to make more sales directly to
consumers, often via the Internet.
Dell, speaking to a small group of reporters at the PC Expo, also said
his company plans to start a consumer auction service for refurbished
computers. The executive said more details will be forthcoming.
Dell noted that his company still has lots of room for growth. If Dell
adds 20% to its market share in the next five years, it would be a $90 billion
opportunity, Dell said. Plus, four emerging areas of business - consumer PCs,
services, geographical expansion and enterprise computing - should each add
$10 billion in incremental annual revenue within several years, Dell said.
Analysts estimate that the Round Rock, Texas-based company will report
fiscal 2000 revenue of $26 billion, Dell noted. The company reported fiscal
1999 revenue of $18.2 billion.
Even as PC prices fall, Dell still is gaining market share with its
service, efficiency and ability to extend value to the customer, the executive
said. "We can make a profit selling an $899 computer, while our competitors
can't," Dell said. The average selling price for a Dell computer is $2,300, he
added.
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(:CPQ) (:DELL)
06/22 1:40p CDT
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