Dell's doing just swell
Michael Dell says high-flying PC maker is primed to grow even more
NEW YORK (CNNfn) - If you're Michael Dell, it's good to be the king.
Dell Computer Corp. reported stronger-than-expected second-quarter earnings Tuesday, coming in 4 cents ahead of First Call estimates. The company also announced a 2-for-1 stock split, its fourth distribution in two years.
Investors have salivated over the news. Dell (DELL) shares were up a whopping 11-5/16, more than 10 percent, at 120-7/8 just after the opening bell Wednesday.
All this would seem like reason enough for any company to take a breath and enjoy the moment. But Michael Dell, the direct PC vendor's chairman and chief executive officer, told CNNfn the company still has more work to do.
"Dell has 8 percent of the world PC market and 14 percent of the U.S. market," he said. "We believe the opportunity for growth is significant. Our goal is to grow faster than the market in the next several years."
One of the areas in which Dell hopes to grow is the service business. Dell pointed out the company's financial service unit is growing steadily and that partnerships with third-party service companies already have helped the PC maker stay ahead of the competition.
Unlike other top computer makers, such as Compaq Computer Corp. (CPQ), Dell has chosen to stay out of the sub-$1,000 PC business, opting for products with higher margins. Although the average selling price of a Dell computer slipped during the second quarter, Dell pointed out that was more a factor of industry economics rather than pricing pressures from competitors.
"The primary driver in the average selling price being down is that component costs are coming down," he said. "That's not necessarily a bad thing. We approach our business by the amount of margin we earn per unit, not the average selling price. Component costs coming down has helped us."
On top of its other successes, Dell -- unlike just about every other computer-related company -- has been immune to the financial crisis in Asia. The company reported a 34 percent increase in revenues in Asia, and Dell said there are even more opportunities.
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