| | Dell Upbeat on 2004 IT Spending
By K.C. Swanson
Staff Reporter
12/29/2003 11:01 AM EST
Click here for more stories by K.C. Swanson
Computer hardware giant Dell (DELL:Nasdaq - commentary - research) expects corporate spending to start finally picking up in 2004.
"It looks as if the large companies will slowly return to spending on new IT equipment," CEO Michael Dell said Monday in comments made to a German business newspaper. "This could bring the breakthrough we hope for because companies have been very reluctant."
He also said that in general, big companies are using computers as long as four or five years before replacing them, according to wire service reports.
In a similar vein, Intel (INTC:Nasdaq - commentary - research) CEO Craig Barrett said at at a Nov. 20 analyst meeting that the chipmaker hopes to benefit from an uptick in spending by U.S.-based big companies next year. "We could start to see enterprise investment in [2004] ," he said, though he added that a "major, major upgrade" doesn't seem likely.
In the short term, Dell cautioned Monday that PC sales could see a drop-off in the first quarter, as they typically do in the wake of the holiday season.
Dell's business should do well in the period, however. Back in November, the company guided for unit sales to rise 25% from the prior quarter, vs. likely unit growth in the mid-teens for the overall industry.
Helped by surging consumer demand for notebook computers, PC sales in 2003 have risen much more than expected early in the year. In mid-December, research group IDC raised its annual growth forecast for unit sales to 11.4% growth to 152 million units, up from 8.4% growth earlier. Such growth would mark a new record for sales, surpassing by 9% the levels reached in 2000.
At about 10:45 a.m. EST, Dell shares were up 41 cents, or 1.2%, to $34.17 while Intel shares were up 51 cents, or 1.6%, to $31.87.
thestreet.com
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FRANKFURT (Reuters) - The world's largest personal computer maker, Dell Inc., expects large companies to resume spending on information technology in 2004, Chief Executive Michael Dell was quoted as saying on Monday.
In a joint interview in German business daily Handelsblatt, Chief Operating Officer Kevin Rollins added that Dell's Christmas business had been going very well.
"It looks as if the large companies will slowly return to spending on new IT equipment," Dell was quoted as saying in the interview. "This could bring the breakthrough we hope for because companies have been very reluctant."
Rollins cautioned that corporate customers were waiting longer to replace computers.
"We see that corporate customers aren't replacing their computers after three years, as they used to, but that they are using them one or two more years," Rollins said.
Market researchers have said personal computers in this quarter were shipping out at a rate last seen during the tech bubble, as notebook computers were at the top of many Christmas shoppers' gift lists.
Rollins said that spike in demand could fall during the first quarter.
"Nobody knows if there isn't going to be a slump in the next weeks. Especially the consumer business is prone to such a decline in the first quarter," Rollins said.
Last month, Dell said it expected to post revenues of $11.5 billion in the quarter to January, and earnings of 28 cents per share.
Rollins reiterated he was optimistic that annual revenues would grow to $60 billion by 2005.
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