Don't panic. This decline is not being caused by any problems with Dell's operations.
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Top Stories: Austin Notebook: Dell Sees No End to PC Era
By Eric Moskowitz
Staff Reporter
10/8/98 1:00 PM ET
AUSTIN, Texas -- Ignoring the pummeling that his stock has taken over the past two weeks, Michael Dell was upbeat about the PC industry and the future of his own company, Dell (DELL:Nasdaq).
Speaking to almost 100 reporters and editors Thursday morning at the Society of American Business Editors and Writers conference, the former newspaper salesman said the end of the PC industry is not here.
"We don't see this as the year the PC market blows up," said Dell. He pointed out that the company's growth rate over the first half of 1998 -- 70% -- was higher than its 1994 to 1997 growth rate of 59%. With growth like this, Dell needn't enter the sub-$1,000 PC market.
In 1994 Dell exited the retail consumer market, even though it was, and still is, the fastest-growing part of the PC industry. "People said the move would launch us into obscurity," he said. Now with the pressure to re-enter this market resuming, Dell argued that it wouldn't be best for his company's shareholders to do so, especially in light of the recent tech backlash that has knocked some 34% off Dell's stock in the last two weeks.
"We still feel that the corporate market and our expansion in global markets is best for our shareholders in the long run," Dell said. The company is placing a big bet that it can replicate its direct sales model overseas, even in currently unstable places such as China and Latin America.
Dell said his company sold 3 million units in China last year, and he expects the company to grow by 29% a year through 2002.
"I can see China surpassing Germany and even Japan as the No. 2 fastest-growing market," Dell said. After all, there are 1.3 trillion people in China, so even if just one out of every 300 people buys a PC, that's still a lot of PCs, he said.
He also said the corporate market will remain robust thanks to the year 2000 problem. While a recent chief information officer survey by Merrill Lynch hinted at a decrease in IT spending in 1999, Dell said companies were still installing software applications and would need new computers to do this. As an example, he said the Federal Aviation Administration just requested $100 million more to buy new hardware to install new year 2000-compliant systems. |
