DELL CEO ISSUES BULLISH OUTLOOK FOR COMPANY, PC INDUSTRY AS A WHOLE
September 25, 1998 4:02 PM- DOW JONES ONLINE NEWS
AUSTIN, Texas -(Dow Jones)- Dell Computer Corp.'s
chairman and chief executive officer on Friday issued
a bullish outlook for both his company and the PC
industry as a whole, saying Dell is targeting annual
growth of 50%.
With a 9% share of the market, the world's top
direct-seller of computers has plenty of headroom to
grow and plans to take advantage of that, said Dell's
CEO, Michael Dell.
Speaking at the company's fall meeting here, Dell
said the PC market likely will continue to grow by an
average of 17% annually over the next three years.
Even if if the PC market were to slow down, his
company and its top three competitors would still see
strong growth as users continue to migrate to a few
well-known brands, he said.
He mentioned Compaq Computer Corp. (CPQ),
Hewlett-Packard Co. (HWP) and International
Business Machines Corp. (IBM) as the other
companies that are growing faster than the rest of the
market.
In afternoon trading Friday, Dell's shares (DELL) were
up $2.063, or 3.3%, at $65.375 atop the Nasdaq
actives with 30 million shares changing hands.
"We have a very bullish industry outlook," Dell said.
"We do believe we will outgrow the market over the
next few years.... We don't see a consolidator or a
limiter of Dell's growth," the executive said.
Dell's estimate of a 17% PC-market growth rate is a
bit more optimistic than one released earlier in the
month by International Data Corp., a market research
group in Framingham, Mass. IDC estimated that PC
shipments will increase 12.2% in the second half of
the year, typically the sector's strongest period. For
the first six months, global growth was 9.6%.
Although IDC said turmoil in the Asia/Pacific region
continues to constrain the industry, Dell said the
recent problems in the world's worry spots so far
haven't hurt its business.
"These are markets under intense market turmoil, but
our business is looking pretty good there," he said.
"These countries realize that (technology) is not an
area they can cut back on as easily as other areas."
Indeed, Dell has defied gravity in Asia, most recently
posting second-quarter sales growth in such hard-hit
areas as Japan. Dell did acknowledge that the
company is starting with a relatively low market share
in some foreign markets, making initial fast growth
easier to achieve.
Still, the executive said his company expects its
business around the world to expand and flourish.
"We're targeting consumers and the enterprise and
storage segment in every market in the world," Dell
said.
Dell said the company's direct-selling business model
and its limited inventory helps it capitalize on any
positive changes in business conditions, something
that is more difficult for competitors. "With a complex
distribution system, they won't get the benefit through
to customers," he said.
In a question and answer session, Dell also defended
his support of Intel Corp. (INTC) and Microsoft Corp.
(MSFT), both subjects of antitrust investigations. Dell
has been unwilling to break from using Intel as its
exclusive provider of computer chips - unlike
competitors IBM and Compaq, which have used
alternative chips from Advanced Micro Devices Inc.
(AMD) and others. Dell says he has stuck with Intel
because the alternative suppliers haven't been
competitive.
"We are not a subsidiary of Intel or Microsoft and we
do not do things on behalf of their shareholders," he
said. Dell's strategy is not "Intel-only or
Microsoft-only," he explained - it's "profit-only."
In part because of Dell's reluctance to go with
cheaper components, the company hasn't
participated in the sub-$1,000 PC market. But Dell did
say that the company's prices have come down -
notably for notebook computers, in part to stimulate
demand for them.
Dell said notebook PCs tend to have higher average
selling prices than do desktop computers, and people
tend to upgrade laptops more often than desktops.
Dell also noted that the company is focusing on
broadband-ready personal computers that will provide
easy access to the Internet. "We want people to get
out of the box and onto the Internet in about five to 10
minutes," he said.
Separately, Dell said that if in the computer
components industry should trigger higher prices for
parts, he doesn't expect those costs to weigh down
his company.
If the decline in component prices were to slow down,
"you would see the average selling price of computers
go up," Dell said in an interview on CNBC Friday.
He explained that the higher prices for computers in
such a climate would boost Dell's gross margins.
Copyright (c) 1998 Dow Jones & Company, Inc.
All Rights Reserved.
SmartMoney Interactive © 1997-1998 Dow Jones & Company, Inc. All Rights Reserved.
|
