Dell CFO Sees Stronger Europe Sales
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Dell CFO Sees Stronger Europe Sales
(07/01/98; 8:21 p.m. ET)
By Gabrielle Jonas, TechInvestor
Dell Computer expects strong growth in European sales in the second half of this year, the company's CFO said Wednesday.
Brushing aside concerns about flagging PC demand in Asia, Thomas Meredith said the company is comfortable with second quarter earnings estimates -- pegged at 46 cents per share by First Call -- and painted a picture of long-term growth and stability, rather than any profit bursts in the short term.
"The Asian flu clearly has countervailing implications," Meredith said, but "we still feel good about the value proposition in Asia. We are really well-positioned, regardless of what's happening with [the delay of] Merced and Y2K."
Europe in the second half of this year will be "very robust," Meredith said, in part because of improvements in the macroeconomic environment. The company is trailing Compaq [CPQ] and IBM [IBM] in Europe, however, according to Ashok Kumar, who follows Dell (company profile) for Piper Jaffray.
"Some of the non-top-tier players' problems are allowing some of the bigger players to consolidate the market more rapidly," in Europe, Meredith added. "We already saw that in the fourth and first quarters." Dell posts stronger sales in Europe every quarter, not just every year, he said.
When asked whether the PC industry will become more dependent on the enterprise-servers business as consumer PC prices fall, Meredith said declining prices are not eating into Dell's bottom line. And with notebook growth of 80 percent a year, the company can well afford to drop notebook prices by several hundred dollars. "We did that because we could," he said.
But Dell does have big plans to ramp up its enterprise business. "We expect the enterprise business for Dell -- which currently contributes 11 percent of overall revenue -- the target should be closer to 30 percent over time," Meredith said.
On Wednesday, shares of Dell [DELL] closed up 1 1/8 to 93 15/16.
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