Dell Says US Corporate Technology Demand Is Up, But Not Rebounding

New York, April 5: | Updated: Apr 6 2002, 05:30am hrs
Dell Computer Corporation, the leading personal computer maker, on Thursday said that the demand of corporate technology in the United States has improved slightly but hasnt rebounded, attributing its improved quarterly revenue outlook to further market share gains.

Speaking at 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 added that it may be six quarters before a long-awaited rebound hits its stride.

Mr Michael Dell, founder and chief executive of the company, said the companys first quarter ending May 3 has been helped a bit by corporations finally making technology purchases which they had been putting off.

"We are seeing some of the replacement projects start roll over and demand ever so incrementally improving," Mr Dell said.

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. A Wall Street analyst agreed with Mr Dells analysis, saying that the US market has been stable since the end of the third-quarter.

"I think its safe to say that youre probably seeing a minute improvement," Merrill Lynch analyst Steven Fortuna said. "The idea is, it isnt 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.

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 dont think you are going to get (chief executives) to open the purse strings until you get a real serious recovery," Mr Rollins told analysts. "They are just not going to get caught in that way."

After Wednesdays market close, the Round Rock, Texas, 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 per cent from the $8.06 billion in revenues reported for the fourth quarter, and is better than the 3 per cent to 5 per cent drop Dell had forecasted in February.

Mr Brett Miller, an analyst at brokerage AG Edwards, said most of Dells extra revenue was booked during February and with March in line with the companys plan.