"I believe industry demand is strong and our competitive advantage remains as strong as it has ever been," Chief Executive Michael Dell said.
Paul-san:
Here are some interesting points to remember.
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By Jerry Mahoney
American-Statesman Staff
Published: April 13, 1999
Reacting early and often to Compaq Computer Corp.'s warning last week that revenue and profit would fall short of Wall Street's expectations, investors on Monday sheared nearly 25 percent from the Houston company's stock price, dumping Dell Computer Corp., IBM Corp. and Hewlett-Packard Co. shares while they were at it.
Analysts said that Compaq's problems are not industry-wide, however.
Round Rock-based Dell, for example, appears to be poised for a strong quarter, while IBM and HP appear to be running according to plans, said Steve Dube of Wasserstein Perella Securities in New York.
"Compaq's under a lot of pressure," Dube said. "They're also facing some credibility problems: just not being able to forecast demand."
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He also said Compaq was overly optimistic about how much revenue would flow to it from the computer services business of Digital Equipment Corp., which Compaq acquired last year.
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Compaq's plight contrasts sharply with the confidence that Dell executives displayed last week in their annual spring briefing for Wall Street analysts.
"I believe industry demand is strong and our competitive advantage remains as strong as it has ever been," Chief Executive Michael Dell said.
Those advantages include Dell's pioneering exploitation of the Internet, which International Data estimates will account for $237 billion in commerce in 2001, up from $32 billion last year.
"Every company (that) makes PCs has to deal with the declining returns that we're seeing," said analyst Acree. "It's going to be a matter of who can handle this most adeptly."
Compaq, the No. 1 PC maker, may be in store for more bad news when estimates of total market share are released by IDC and Dataquest Inc. later this month.
A recent ZD Market Intelligence study estimated that Dell for the first time passed its cross-state rival for share of the business with U.S. companies that have more than 500 employees. Dell captured 30.9 percent of that market in the first quarter, compared with 21.5 percent for Compaq.
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