Dell says PC demand is solid
By Reuters
Special to CNET NEWS.COM
March 6, 1998, 4:45 p.m. PT
news.com
Dell Computer (DELL) has been largely immune to the sales slowdown cited by rival Compaq Computer (CPQ), the company said today.
The company is experiencing normal seasonal fluctuations in sales, but overall "it's kind of business as usual," spokeswoman Michelle Moore explained. "Our demand in major markets is firm and no different from normal seasonal patterns for us," she elaborated.
Earlier today, in another high-tech earnings surprise, Compaq reported today that its first-quarter revenues would be roughly flat from a year ago--far below Wall Street's expectations--while earnings are expected to be roughly break-even. The shortfall owes to slower-than-expected sales, pricing pressures, and increasing inventories in the North American market, Compaq said. (See related story)
"We are neither feeling nor creating particularly unique price pressure at this point in time," Dell's Moore said. "We continue to price within our historical bands and we continue to price to our cost structure."
"Basically, we're feeling about as good about our model and our direct [sales] approach as we ever have..."
Compaq said it would initiate price cuts to clear inventory, but Moore said that was unlikely to influence Dell's business plan. "We don't tend to react to them anyway," she said.
"We exited the quarter with very high-end product line and very low inventory, which positions us well for some of the new product introductions and innovations coming from Intel a little later in the year," Moore said, referring to coming advances in the clock speed of the Pentium II.
"It's not atypical for companies [like Compaq] who sell through resellers to have larger channel inventories, and that can be a problem if demand moves to the high end," she said.
Last month, Dell reported earnings of $0.81 a share in the fourth quarter of fiscal 1998, up from $0.50 a share for the same period a year ago.
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