Dell: PC Market Slow and May Stay So
Thursday July 18, 1:55 pm Eastern Time
Reuters Market News
Dell: PC Market Slow and May Stay So
By Jeff Franks
AUSTIN, Texas (Reuters) - The stumbling economy continues to dampen demand for personal computers and could do so for the rest of the year, Dell Computer Corp. (NasdaqNM:DELL - News) Chief Operating Officer Kevin Rollins said on Thursday.
Despite the slow market, No. 2 computer maker Dell is gaining market share, partly because of the recent merger of Hewlett Packard Co. (NYSE:HPQ - News) and Compaq Computer Corp., Rollins told reporters after Dell's annual shareholder meeting here.
"The corporate market is not seeing signs of an uptick .... Right now they (corporate executives) are very conservative," he said.
"When will a turnaround happen? I don't know. I think the longer we go this year (without it) the likelihood of it happening in the fourth quarter is pretty low," Rollins said.
"You're going to have to see some earnings solidification and stability, and maybe even some uptick before you start seeing some increase in capital expenditures."
Dell surprised Wall Street last week when it raised revenue guidance for the second quarter to $8.3 billion, up from $8.2 billion, and earnings per share to 19 cents from 18 cents.
One factor in the slight improvement, Rollins said, was that Dell is snapping up market share at HP's expense as HP tries to consolidate its merger with Compaq. The merger made HP the No. 1 computer maker.
"What we're seeing is a lot of confusion both in their supplier base ... and in their alliance partners and customer base," he said.
"So, what we're seeing is that we're being invited into a lot more deals with business and the government than we were before."
In comments to shareholders, Dell Chairman and founder Michael Dell said Dell has increased its global share of the computer market from 10 percent to 14 percent in the last six quarters.
"If we continue at that rate we would have 20 percent within 2-1/2 years," he said. The company has set a goal to double revenues from $31 billion last year, but not within a specified deadline, Dell said.
Rollins said Dell wants to get into the highly profitable printer business and is likely to do so with a partner by year's end. He said the partner would make the printers, but they would carry the Dell name.
Referring to recent financial scandals involving U.S. companies which cooked their books or lied about earnings and revenues, Dell assured shareholders that the computer maker has a clean, honest balance sheet.
"Our officers, myself included, sign off on a regular basis on our financial statements," he said.
"We believe that when we say this is what our numbers are, that's what they are. Our parents taught us how we're supposed to do things."
Dell's stock rose 16 cents, or 0.6 percent, to $26.50 in mid-afternoon Nasdaq trading.
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