Dell Says Market Is Finding Its Low Point
Posted on: Wednesday, 15 July 2009, 06:28 CDT
Dell Inc. announced Tuesday that the U.S. personal computer market has reached its low point, but the timing of the global turnaround in the technology industry still remains a mystery.
The computer company said it expected slightly stronger sales in the current quarter than in the last one. However, Dell executives said Tuesday that many of the conditions that hurt the PC industry over the last several quarters aren't easing up.
Businesses have tightened up their budgets on technology spending and have also put off new computer purchases as the economic crisis persists. Consumers are now more eager to buy netbooks than more expensive personal computers.
"Certainly customers are elongating the life cycle" of their machines, Chief Executive Officer Michael Dell said.
Dell said that he expects replacements for aging computers to come in by 2010. At that point Microsoft will have released its newest operating system, Windows 7.
Until then, Dell is advising analysts that improvement in its business still varies significantly by region and product type.
Brian Gladden, Chief Financial Officer, said U.S. sales are "not necessarily getting a lot better," but they are "finding a bottom" as the quarter comes to an end July 31.
Gladden said that China is pushing revenue in Asia higher, and Latin American sales appear to be improving. However, Western Europe is still weak and is even deteriorating.
Worldwide sales to businesses are still weak for Dell, similar to the first quarter when Dell saw revenue sink 23 percent to $12.3 billion.
Gladden said the division that sells to educational institutions and the government is getting better, as schools prepare for the upcoming year.
Michael Dell said that his company is chasing higher profiles rather than increased market share in the consumer PC business, which has slim margins.
According to Gladden, higher costs for LCD screens and memory are cutting into Dell's profits and will continue for at least three more months. The company is also slashing prices to maintain its market share in some areas.
"That's a bit of a new dynamic," Gladden said.
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Source: redOrbit Staff & Wire Reports
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