INTERVIEW-Dellexpects good Europe
growth
By Neil Winton, Science and Technology Correspondent
LONDON, May 19 (Reuters) - Dell Computer Corp, the world's
leading direct seller of personal computers, said on Wednesday it
expects powerful growth to continue in Europe despite lack of
success in Germany.
When the Texas-based company announced its results for the first quarter to end-April on Tuesday, it
said sales growth in Europe had slowed to 29 percent year-on-year from 40 percent in the previous
quarter.
Analysts said Dell, like many PC sellers, had particular problems in Germany.
But an upbeat Jan Gesmar-Larsen, President of Dell Europe, told Reuters on Wednesday in a telephone
interview that despite the slower growth, the company had jumped into second place in Europe's market
share league in the first quarter.
''We are in number three position in eight markets and number five in 11 and we feel there is stil a lot of
growth potential in these markets,'' Gesmar-Larsen said, adding that Dell was very positive about 1999.
He shrugged off worries about Germany, saying Dell's strategy was to be profitable and Germany had
never been its biggest growth driver.
''Nobody makes money in Germany. People are just paying to get into the market and that's not what
Dell is interested in,'' he said.
Marie-Christine Pygott, analyst at market researcher Context, confirmed Dell was not alone in having a
problem in Germany.
''Germany is thought of by many (personal computer sellers) as a headache. Lots of local
manufacturers are very strong with Siemens (quote from Yahoo! UK & Ireland: SIEG.F) in particular. Fujitsu is
nearly at the same level and there's all the local vendors,'' she said.
Dell reported on Tuesday that first quarter profits rose 42 percent to $434 million as revenue grew 41
percent to $5.5 billion. Gross margins fell to 21.5 percent of revenues from 22.4 percent in the fourth
quarter.
But although it gave figures for European sales growth, it did not break out profits for the region.
Gesmark-Larsen shrugged off scares that PC sales had been ramped up recently as companies
scrambled to prepare for the millennium computer bug. He said he expected Dell's sales to continue to
grow across the board.
Last month software giant Microsoft Corp (Nasdaq:MSFT - news) warned that it was worried that the
information technology industry faced a period of uncertain sales as big corporations completed
preparations early to fight off the millennium bug.
Miscrosoft worried that recent strong sales of personal computers might represent an unsustainable
bubble.
''We don't see any bubble bursting. We are still growing in large accounts as well,'' Gesmar-Larsen
said.
According to Context, Dell leapfrogged over International Business Machines Corp (NYSE:IBM - news)
to become the world's No. 2 personal computer maker in the first quarter with 9.3 percent of the market
behind Compaq Computer Corp's (NYSE:CPQ - news) 17.5 percent.
Last year almost 25 million personal computers were sold in Europe. Context expects this to increase
by around 20 percent in 1999.
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