off the Press - News & Commentary
04/08/2005 - from Reuters
Growth Slower Than Forecasted
Growth in the personal computer industry during the first
quarter is slower than market leader Dell Inc. expected but the company
anticipates growing much faster than the rest of the sector, just as
it has in other times of turmoil, its CEO said on Thursday.
In an annual briefing for Wall Street analysts, Chief Executive Kevin
Rollins said most of Dell's growth over the next three to four years
will come from newer, non-PC businesses as it increases revenue to $80
billion annually from $50 billion.
Newer products for Dell, including storage, printers, and high-end TVs,
can help insulate the No. 1 PC maker from boom and bust cycles, he said.
Rollins pointed to market research data that forecasts 10 percent growth
in first-quarter global PC unit shipments, down from average growth of
16 percent in the prior six quarters.
As we have come into (the first quarter), it's become clear things are
a bit slower (than last year), a little bit slower than maybe we had
even thought," Rollins said, referring to the 10 percent forecast
by research group IDC.
We are not worried about that," he added. "Otherwise we would
have taken our numbers down," he said.
On Wednesday, Dell left its own revenue and outlook profit unchanged
for its first quarter ending later this month, saying it expects revenue
of $13.4 billion, up 16 percent from a year ago, and 37 cents a share
in profit, up 32 percent.
However, Bernstein analyst Toni Sacconaghi criticized executives of the
Round Rock, Texas, company for masking how dependent Dell remains on
PCs and closely related businesses.
" I think PC
units actually end up driving about 75 percent of current revenue," Sacconaghi
said of Dell's results. He defined PC revenue as sales of desktop PCs,
notebooks and related services.
As the two-day analyst briefing wound down, shares of Dell rose 19 cents to $38.34
in afternoon trading on the Nasdaq.
Turmoil, But No PC
Over the past decade, Dell has gained market share faster in years
of industry decline than when industry fortunes were rosy, Rollins
Rollins ticked off omens of turbulence: IBM is seeking to pull out
of the market by selling its PC business to Lenovo, recent
changes at Hewlett-Packard ) and Sony Corp.,
and struggles facing U.S. rival Gateway and other
Taiwanese and Japanese competitors.
Customers don't like turbulence," Rollins said of what he said was
a key factor driving Dell's market share gains. "So they gravitate
to the stable provider," he said.
Despite the turmoil, Rollins said that talk of PC industry price wars
had not been borne out by sales data in recent years. He noted that
while prices are in constant flux across different product categories,
pricing remained stable.
Dell's own PC sales grew more than 50 percent faster than the rest
of the industry during 2004. Unit shipments of Dell PCs grew 21 percent
last year, compared with 13 percent growth in the rest of the industry,
excluding Dell's shipments.