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Strategies & Market Trends : VOLTAIRE'S PORCH-MODERATED -- Ignore unavailable to you. Want to Upgrade?

To: Jim Willie CB who wrote (49536)	4/4/2002 4:50:30 PM
From: stockman_scott	Read Replies (1) \| Respond to of 65232

Dell: Demand Up but No Recovery Yet By Caroline Humer Thursday April 4, 4:12 pm Eastern Time NEW YORK (Reuters) - Dell Computer Corp., the No. 1 personal computer maker, on Thursday said corporate technology demand in the United States has improved slightly but hasn't rebounded, attributing its improved quarterly revenue outlook largely to further market share gains. Speaking during an analyst meeting, Dell executives said they expect only a modest recovery in spending on technology such as computer servers, personal computers, and data storage in the second half of 2002 and said it may be six quarters before a long-awaited rebound hits its stride. Michael Dell, founder and chief executive of the Round Rock, Texas company, said Dell's first quarter ending May 3 has been helped a bit by corporations finally making technology purchases they had been putting off. ``We are seeing some of the replacement projects start to roll over and demand ever so incrementally improving,'' Dell said. Dell shares rose about 2 percent on Thursday, gaining 58 cents to $26.77 in late afternoon Nasdaq trade. The American Stock Exchange hardware index .HWI> was up 1.34 percent. On the whole, corporate technology spending has been very weak in recent quarters as the economy suffered. For Dell, corporate sales were off in its fourth quarter despite strong consumer sales. One Wall Street analyst said he agreed with Dell's analysis, saying that the U.S. market has been stable since the end of the third-quarter. ``I think it's safe to say that you're probably seeing a minute improvement,'' Merrill Lynch analyst Steven Fortuna said. ``The idea is, it isn't getting worse.'' Dell rose to the top of the personal-computer industry in 2001 by using its direct-to-customers sales model to drop prices and take market share from competitors like Compaq Computer Corp., Hewlett-Packard Co. and Gateway Inc.. Now Dell is preparing for more competition if Compaq and HP merge as planned in what would be the largest technology deal ever. That merger, which needs a final tally of shareholder votes to go forward, would create a company as large as No. 1 computer maker International Business Machines Corp.. Dell Chief Operating Officer Kevin Rollins was careful to say that most of the added first-quarter revenue was not related to new corporate technology demand. ``I don't think you are going to get (chief executives) to open the purse strings until you get a real serious recovery,'' Rollins told analysts. ``They are just not going to get caught in that way.'' After Wednesday's market close, the company raised its revenue forecast to about $7.9 billion for the first quarter ending on May 3, saying it had gained new business by keeping prices low. The outlook represents a decline of about 2 percent from the $8.06 billion in revenues reported for the fourth quarter, and is better than the 3 percent to 5 percent drop Dell had forecast in February. Brett Miller, an analyst at brokerage A.G. Edwards, said most of Dell's extra revenue was booked during February, with March in line with the company's plan. Miller said the key now for Dell, and other computer makers, is corporations signing on for new technology. ``Right now there are no new big IT projects for the second-half,'' he said. Dell shares have fallen 2 percent since the end of 2001 while the American Stock Exchange Computer Hardware index has fallen 6 percent. Also on Wednesday, the company said it is maintaining its expectations for first-quarter earnings per share of 16 cents. In terms of growth, Dell's Rollins said the company would like to double revenue in the next four to five years, depending on how quickly the economy recovers. In fiscal 2002, the company had revenues of $31.2 billion. That compares with IBM's 2001 revenue of $88 billion and Compaq's $33 billion in revenue. HP had fiscal 2002 revenue of $45.5 billion.