Dell bets on business: cnnfn.com
Company expects workstations, servers to
generate substantial growth
NEW YORK (CNNfn) - Dell Computer Corp. has a simple
long-term growth plan: Go where the money is.
The Round Rock, Texas-based computer company
became famous for selling personal computers to
consumers and businesses.
While it's not abandoning those markets, Dell plans to
put an increasing amount of resources into developing the
more lucrative workstation and server markets.
"These are very lucrative businesses with much higher
margins than desktops and notebooks. We think we can
continue to grow much faster than the industry [average]
by expanding in those sectors," Dell said.
Appearing Monday on "Moneyline With Lou Dobbs,"
Dell said his company has increased its workstation and
server business by more than 150 percent a year for the past
seven years.
Dell's decision to concentrate more on workstations and
servers isn't that surprising given an 8 percent decrease in
the average sale price of a new PC.
While the company's growth is slowing, it's still
continuing at a torrid pace -- an average of 119 percent a
year over the last five years.
Dell said he would like to continue to increase revenue
by 50 percent a year.
Dell's stock has suffered a bit of late, off 18 percent from
its 52-week high of 98-1/2. Dell (DELL) shares fell 2-5/8 to
80-1/4, Monday, reflecting the broader market decline.
However, he company's stock has also been on a tear
over the past five years, growing an incredible 6,407
percent.
(Click here for a 52-week stock chart)
The company also beat analysts' earnings expectations
for 11 straight quarters.
Dell said the recently-closed merger between Compaq
Computer Corp. and Digital Equipment Corp. will give his
company even more expansion opportunities. (300K WAV)
or (300K AIFF)
Dell believes that such combinations can often create a
dilemma for customers who may not prefer to buy all their
equipment and services from one company.
"The problem is if Compaq goes into consulting and
becomes a competitor of EDS, they will be less inclined to
recommend their customers buy Compaq products," he
said. |
