(Austin American-Statesman/KRTBN)--NEW YORK--Making his
bluntest public assessment of Compaq Computer Corp.'s problems, Michael
Dell said Tuesday there is a "massive state of confusion" around his
cross-state rival, and he suggested Compaq is hemorrhaging corporate
customers to Dell Computer Corp.
"We're in a full account-acquisition mode," the chief executive of
Dell said during a briefing with reporters at the Four Seasons Hotel.
"Sounds like a party for us."
Dell Computer, Compaq and hundreds of other hardware and software
companies that make up the personal computer industry are in New York
for PC Expo, the annual trade show that this year attracted an
estimated 75,000 participants to promote and evaluate the latest
products for businesses.
The 34-year-old Dell's almost gleeful reference to Compaq's battle to
reduce operating costs, improve manufacturing efficiency and adopt a
more Dell-like model of marketing and assembling computers underscores
the bitter rivalry between the two Texas PC giants. Compaq, based in
Houston, is the No. 1 PC company in total PCs shipped. But Dell is
rapidly closing the gap and has taken over the No. 1 slot in such key
segments as small business, according to research company International
Data Corp.
Meanwhile, Compaq announced last week that it might lose $250 million
this quarter and that it plans thousands of layoffs in the wake of the
April firing of Chief Executive Eckhard Pfeiffer and resignation of a
handful of senior executives that followed. The company also warned
Wall Street that it would take a $2 billion charge against earnings
this year as it reorganized.
Dell said that the $2 billion charge coupled with a $5 billion charge
Compaq took last year, in part because of its acquisition of Digital
Equipment Corp., would "wipe out" all the company's profit since 1987.
Compaq spokesman Alan Hodel said the company declined to comment on
Dell's remarks.
Lou Mazzucchelli, vice president of investment banking company Gerard
Klauer Mattison & Co. Inc. in New York, said Dell has been aggressively
trying to capitalize on Compaq's problems.
"If I were them, I'd be doing the exact same thing," he said.
Dell also said Tuesday that his company plans to offer online
auctions of personal computers and will launch an Internet service
provider program. He declined to provide details.
While Dell relishes what he called the "perfect competitive
environment" with Compaq, his tone was more of the joyful victor than
vindictive enemy. He said market-share data suggest that Dell is taking
business away from other competitors as well as Compaq, and he
displayed his usual confidence in Dell Computer's prospects in the
industry.
Showing a chart of Dell's 50 percent to 60 percent growth in PCs
shipped from 1996 through the first quarter of this year, Dell said the
industry's rate of growth actually slowed in 1996, 1997 and 1998
without Dell Computer's shipments.
Interest in the Internet will continue to drive the PC industry, Dell
predicted, and high-speed Internet connections such as cable modems or
ADSL lines will prompt users to upgrade their PCs to more powerful
models. Various industry projections say there soon will be a
proliferation of small, digital appliances connecting people to the
Internet, e-mail, stock prices and weather reports.
"They would serve the purpose of giving you information where you are,
essentially addicting you to information, but none of these devices are
a replacement for the PC," Dell said.
For millions of digitally connected households, the common PC will be
a server that allows those devices to work in concert.
"The more data-addicted people are, the more PCs will flourish," Dell
said.
Moreover, Dell said the industry "is at the beginning of a huge wave"
of companies trying to plug into the potential of Web sales, or
e-commerce.
Dell also said that three growth areas -- consumers, enterprise,
services and expansion into industrialized countries where PC use is
less than 10 percent of the population -- offer Dell additional revenue
of $10 billion each "over the next several years."
The company, which some analysts expect to reach $26 billion in
revenue this year, could grow to a $90 billion company by reaching 20
percent share of the PC industry, Dell said.
By Jerry Mahoney
-0-
Visit Austin 360, the World Wide Web site of the Austin
American-Statesman, at austin360.com
(c) 1996, Austin American-Statesman, Texas. Distributed by Knight
Ridder/Tribune Business News. CPQ, DELL, END!A$3?AU-DELL
|
