No can do,capitulation only if proven wrong-Here is one reason.
11/13/98: One On One With Michael Dell, Dell Computers CEO
PAUL KANGAS: Shares of Dell Computer (DELL) fell for the second day in a row and in spite of the company's better than expected third quarter earnings out yesterday. Many on Wall Street are worried that Dell may have trouble maintaining its growth rate. But NIGHTLY BUSINESS REPORT's Scott Gurvey spoke with chief executive officer Michael Dell, who says his company still has plenty of room to grow.
MICHAEL DELL, FOUNDER & CEO, DELL COMPUTER:
Dell has 9 percent market share and if you look across the world, we see opportunities to grow that considerably, perhaps into the 20 to 25 percent range over the next you know, five years. So there's a massive opportunity as this business continues to grow and with the lowest cost position and the strongest position in terms of product service and reliability, we see tremendous opportunity for us to keep growing.
SCOTT GURVEY, NIGHTLY BUSINESS REPORT, CORRESPONDENT: But is there though some sort of frustration at having to beat these almost like sports score statistics quarter to quarter?
DELL:
Well, I think it's important to remember that our operating margins have remained stable. Our gross margins have remained stable. Our average selling prices have remained stable and we continue to grow at several times faster than the industry. 65 percent earnings per share growth in most industries would be considered quite stellar.
GURVEY: Now of course, you picked up a new competitor, I guess a new old competitor would be the fair way to look at it. Compaq (CPQ) saying it's going to adopt the direct model, at least for some of its sales. What do you see there in terms of the challenge to you?
DELL:
This is not the first time they've adopted the direct model. The first time was, you know, perhaps six or seven years ago and Compaq and others have attempted to been going direct for a long time. Those efforts to date have not been too successful. There's a learning curve. They clearly have channel transition issues and channel conflict issues and Dell is, you know, way up this knowledge curve. We're the number one supplier of PCs to businesses now, growing several times faster than our nearest competitor with a better cost and service position. And I think the efforts that Compaq has under way going into the white box business, also competing with Compaq. IBM (IBM) doing channel assembly. Not all of these are going to work. In fact they might not all work at all. So you have a lot of scrambling going on to try to find a way to build a cost structure that is somehow competitive with ours. But to date, no one has really done that among the top competitors and that gives us a lot of running room to continue to grow. Having said that, this is a market where not one company's going to win the entire business. We happen to be best position and growing the fastest.
GURVEY: Very good. I thank you very much for joining us today. Michael Dell, Dell Computer. |
