From today's wires:
Dow Jones Newswires -- April 9, 1998
Dell's Tone Remains Bullish; Co. Says
Growth To Continue
By Christopher Grimes
NEW YORK (Dow Jones)--Dell Computer Corp. (DELL) set a bullish
tone with Wall Street analysts Thursday, even as many other technology
companies have issued nothing but warnings so far in 1998.
Michael Dell, chief executive and founder of the Round Rock, Texas,
company, said he was confident his company could continue to grow faster
than the rest of the personal computer market in 1998.
Dell's growth rate has averaged about 55% a year.
He said several factors should spur personal computer sales this year,
including the introduction of Microsoft Corp.'s (MSFT) Windows 98, faster
models of Intel Corp.'s (INTC) Pentium II chips and "rich" e-mail
applications that allow electronic transfer of voice and pictures.
"We believe growth in the industry will again exceed 15% between now
and 2000," Dell said. He added that whatever the growth rate is this year,
his company will outpace it. But he did say there were areas that the
fast-growing company needed to improve. For one, the company's brand
image needs some work.
"Dell has suffered brand discounting, and our goal is to eliminate that," he
said. "Our awareness can be extended to a wire market."
Dell, the company's CEO, said there's usually a lot of nervousness during
the first half of the year about the state of the PC industry. But the tone of
Dell's analyst meeting Thursday was decidedly confident.
"We can't remember a time in our history when what we're selling is so
diametrically different from the products that are already out there," Dell
said.
"There is a massive upgrade market, and that favors Dell," he said.
Dell also said the company would begin to sell some of its OptiPlex
desktop computers using the low-end Celeron chip, which Intel is expected
to introduce next week. In some ways, this is a departure for Dell, which
has always said it had no interest in the low end of the PC market.
In addition, early reviews of the Celeron chip have characterized it as
disappointingly slow. Dell said concern about how the market will react to
the chip is "legitimate."
"Our focus is on the high-performance end of the market, and Intel has
made a fundamental shift in its strategy" to address the sub-$1,000 PC
market, he said. "There may be some questions (about the new chip's
performance), and we have some of those concerns."
Dell, the company's CEO, said his company is unlikely to follow the lead of
Compaq Computer Corp. (CPQ) and International Business Machines
Corp. (IBM) of using Advanced Micro Devices Inc.'s (AMD) K6 chip.
The K6 is an alternative to Intel's Pentium II chips.
"If we felt some other product would give us a higher profit, we would use
it," he said. "Intel comes out ahead."
He also took a swipe at his competitors' attempts to emulate Dell's method
of selling computers directly to customers. Compaq and others are using a
hybrid approach of selling computers through partners and selling directly.
"Five years ago, Dell was a direct and indirect company at the same time,"
he said, "and that didn't work. We'll see if it works for our competition."
Dell is committed to expanding its base of vendors who provide services, a
company spokesman said. He noted that this will continue as Compaq has
agreed to acquire Digital Equipment Corp. (DEC), a service provider for
Dell equipment.
However, Dell customers will still have the choice of using Digital
Equipment, he added.
-Christopher Grimes; 201-938-5253 |
