August 18, 2008
Dell Sales Will Outpace Industry, CEO Predicts
By HASLINDA AMIN; MARK LEE
CUTLINES Michael Dell, chairman and CEO of Dell Inc., says his Round Rock, Texas-based company is depending on sales of personal computers overseas, including developing countries. The PC maker plans to add retail partners in India, France and South Korea. Tomohiro Ohsumi/Bloomberg NewsDell Inc. will probably post faster sales growth than the personal-computer market this year, fueled by demand from emerging markets such as India and China, CEO Michael Dell said Wednesday.
Dell, in India to promote a business-laptop line introduced Tuesday, has added products and boosted sales abroad, helping the Round Rock, Texas-based company beat industry leader Hewlett- Packard Co. in revenue growth the past two quarters. Dell is pinning its long-term strategy on an expansion into developing countries such as India where the market is estimated to grow at four times the pace of the U.S.
"It's an area Dell can win in," Jayson Noland, an analyst with Robert W. Baird in Milwaukee said in a telephone interview. "It's probably not significant now, maybe 10 percent of revenue. If you look out more than two years, it's material that Dell be in those markets."
Noland rates Dell shares "neutral" and doesn't own any.
Overseas sales exceeded revenue from the U.S. for the first time in the fiscal first quarter, the company said.
"You've got about 500,000 new users coming on to the Internet for the first time in their lives," Dell said, speaking of the emerging market countries.
Dell increased PC shipments 21 percent in the quarter ending June 30, compared with Hewlett-Packard's 17 percent, and 15 percent for the market overall, according to research company IDC. The second- ranked PC maker also beat Palo Alto, Calif.- based Hewlett-Packard in the previous three months, IDC said in April.
Global shipments may increase to about 300 million PCs this year, Dell said. His forecast is in line with a June estimate by research company Gartner Inc. for PC shipments to rise 13 percent to 297 million.
Dell on Tuesday unveiled business notebooks with as much as 19 hours of battery life. The company also started selling a slimmer laptop weighing 2.2 pounds after Hewlett- Packard offered a similar model in June.
Dell, which in 2007 abandoned selling PCs only via telephone and the Internet, has forged agreements to sell its computers through retailers including Wal-Mart Stores Inc. in the U.S., Gome Electrical Appliance Holdings Ltd. in China, Carrefour SA in Europe, Bic Camera Inc. in Japan, and the Croma chain of electronics stores of India's Tata group.
The company is also adding employees in India to help meet demand in a market where one in 100 people own a computer. PC shipments in India will rise 20 percent in 2009, compared with 5 percent growth in the U.S., according to UBS AG.
Dell's India revenue jumped 60 percent to $700 million last year, outpacing the U.S., Rajan Anandan, vice president of Dell India, said in March. Sales in the country may climb to almost $1 billion in the fiscal year ending Feb. 1, helping Asian growth offset the effects of a slowdown in the U.S., Steve Felice, the company's president of Asia Pacific and Japan, said in February.
"The market is much more prone to buy notebooks," Noland said. "India is primarily a direct market, which plays to Dell's strength."
PC shipments in the U.S. may increase 3.8 percent this year, compared with 6.7 percent in 2007, as companies delay spending amid the slowing economy, according to UBS.
Originally published by HASLINDA AMIN AND MARK LEE Bloomberg News.
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