Dell Sees HP-Compaq Merger as Opportunity for Gain
SAN FRANCISCO (Reuters) - The chief executive of Dell Computer Corp. (NasdaqNM:DELL - news) on Tuesday said the No. 1 personal computer maker may gain market share amid confusion generated by the Hewlett-Packard Co. (NYSE:HWP - news) and Compaq Computer Corp. (NYSE:CPQ - news) merger, which cleared a key legal hurdle on Tuesday.
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Michael Dell, founder and chief executive of the Round Rock, Texas company, said he expects to gain market share while rivals Hewlett-Packard and Compaq seek to merge in what would be the largest technology tie-up ever, creating a company as large as No. 1 computer maker International Business Machines Corp. (NYSE:IBM - news)
PC buyers have been reluctant to order from Hewlett-Packard and Compaq because of the scale and complexity of the planned merger, he said.
"We're very much relying on gaining market share," Dell told analysts and investors at a conference here sponsored by brokerage Merrill Lynch.
A Delaware court on Tuesday ruled in favor of Hewlett-Packard and against dissident shareholder Walter Hewlett, clearing the path for HP's $18 billion purchase of No. 2 PC-maker Compaq.
Earlier this month Dell Computer raised its revenue forecast to about $7.9 billion for the quarter ending May 3, saying it had gained new business by keeping prices low. The company maintained its forecast for first-quarter earnings of 16 cents per share.
Dell bumped Compaq from the top of the PC industry last year by using its direct-to-customer sales model to keep prices down and take market share from competitors Compaq, Hewlett-Packard and Gateway Inc. (NYSE:GTW - news)
"The economy feels like it is gradually improving," Dell said, but added that large companies remained cautious with information technology budgets, which include money for PCs and laptops for employees and servers for their businesses.
Dell's remarks echoed those he made at an April 4 analyst meeting, where he noted that demand was "ever so incrementally improving."
Dell shares closed on Tuesday at $26.34, up 77 cents or 3 percent, while the American Stock Exchange Computer Hardware ndex (^HWI - news) rose 2 percent. |
