RealTime IT News

Dell Not Immune to European Slowdown

Echoing the predictions of other competitors in the PC arena, Dell Wednesday admitted that sales have slackened a bit and were not where they projected them to be.

Although the company remains optimistic about its profitability outlook for the third quarter, Dell acknowledged that European demand has been slow and that worldwide, small business sales have fallen short of expectations. If the softness persists in the fourth quarter, Dell's full-year revenue could be $32 billion, an increase of about $7 billion, or 27 percent, from sales for fiscal 2000.

Despite the shortfalls, Dell said global sales for large corporation, schools and home PC sales continues to shine. The firm is on track to meet the company's profit expectations for the third quarter, although fourth-quarter per-share earnings could be one to two cents below company targets.

While Apple has blamed component shortages in part for lower earnings than expected, Dell claims that its drive toward profitability is owed thanks to favorable parts availability.

Moreover, Dell said customers can expect to see cuts in computer costs because parts costs have seen a reduction, which would ultimately stimulate growth for the company.

Dell said it will announce earnings Nov. 9.

Other notable hi-tech companies such as Intel, Apple Computer and Oracle have all reported slow downs in growth, particularly in Europe.

Still, Gartner Group analyst Martin Reynolds doesn't think the PC industry is suffering. Reynolds said the changes in the market valuations don't make sense. While investors are rushing out to dump stock, he said, others would do well buying.

"We've reached a saturation point," Reynolds said. "And, of course the PC makers overestimate their growth. They used to grow 40 percent, but now it is closer to 10 to 15 percent growth because of the increase in competition."

Reynolds said that while the PC growth in the U.S. is still strong, growth in Europe has lagged due to increase in gas and oil prices and other shifts in the economy.

"The PC market remains fundamentally healthy," Reynolds said. "The problem is that the growth is not insane."