Dell bets on corporate spending for recovery

Dell bets on corporate spending for recovery
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First Published: Fri, Nov 20 2009. 10 54 AM IST
Updated: Fri, Nov 20 2009. 10 54 AM IST
Singapore: Dell, the world’s No.3 PC brand, said on Friday that its core business of selling computers to companies was returning, after a sharp drop-off during the global downturn led to disappointing quarterly results.
Dell’s commercial business has traditionally made up the bulk of its revenue, and is an area where it continues to hold some advantage over recent upstarts such as Acer of Taiwan.
“A lot of the recovery this time has been in the consumer sector, so it’s not surprising to see Dell’s recovery is a bit slower,” Steve Felice, president of Dell’s small and medium business, said.
Earlier, Dell announced that its third-quarter net profit plunged 54% from a year earlier on lower-than-expected sales as it lost market share to competitors amid a wider price war in the sector.
Felice said he was comfortable with market forecasts for PC shipments in 2010, and said the company would be working to outpace the market.
“We know how these figures were derived, and we’re comfortable with the way IDC sees the world going,” Felice said.
Research firm IDC says PC shipments are likely to climb above 9% to nearly 310 million units in 2010 from this year, and an additional 13% in 2011 from 2010.
Asia would continue to drive much of the company’s growth, Felice said, with revenue likely to return to positive growth in the near future. He declined to give details.
Much of this growth came from emerging markets such as China, where Dell said it saw its revenue grow by about 20% in the third quarter from the preceding three months.
Demand for computers also picked up following Microsoft’s launch of its new Windows 7 operating system on 22 October, but the bulk of demand is likely to come from companies looking to upgrade their aging PC systems.
“Windows 7 will have some positive effects on overall PC demand, but the larger effect will come from the older base,” Felice said.
Other rivals, such as Lenovo and Acer, have also been similarly upbeat on the effect of Windows 7 on PC sales, betting that the new operating system will spur commercial demand for computers.
Dell shares tumbled 6 percent following the weak results, which stood in contrast to larger rival HP’s market-beating preliminary earnings this same week.
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First Published: Fri, Nov 20 2009. 10 54 AM IST
More Topics: Dell | Recovery | Acer | Windows 7 | PC shipments |