Dell Happy To Compete Against Compaq/HP Goliath

Michael Dell, the CEO of the world's No.1 PC maker, doesn't worry a bit that two of his biggest rivals have just merged--in fact, he couldn't be happier.

Hewlett-Packard and Compaq Computer, which was until earlier this year the world's leading PC maker, agreed last month to combine in a $25 billion effort to try to stem Dell's rampant acquisition of market share. But since the deal was struck on Sept. 4, both merging companies have seen their share price crumble and market conditions worsen after the Sept. 11 attacks on the United States.

And while Compaq, Hewlett-Packard and others in the sector have warned about earnings falling in the wake of the turmoil, Dell said last week it isn't changing its outlook on earnings or revenue growth.

On Monday, Dell said he wasn't about to start shopping around for acquisition targets either, particularly when competitors' customers were coming to him.

"We've been acquiring our competitors one customer at a time for quite a while now and it's certainly been a great strategy," he told reporters at a news conference in Rome. "I think it [the HP/Compaq merger] creates more opportunities for us than it does challenges."

In fact, Dell has won 26 new customers in the past two weeks alone, accounting for $270 million in revenue, Dell says.

"I can't say we haven't evaluated acquisition possibilities, but there just isn't anything worth buying," he says.

Focus On Europe

In reaffirming its outlook for earnings last week, Dell said sales had staged a surprising rebound within days of the September 11 attacks on New York and Washington.

While the start of retaliatory attacks by the United States on Sunday may have an impact on consumer sentiment, Dell says there were no signs of that as recently as Friday.

"Since the attacks there's been some extra demand and there's been some lack of it and I don't think we know yet exactly how they will offset each other," he says. "What I can say is that we get daily sales information and sales on Friday were good, in fact, they were very good. What customers will do tomorrow, I don't know."

Market conditions in the United States in the coming months are not forecast to be buoyant and Dell is not expecting the fourth quarter to be 'a huge, dynamic period,' but the company has increased its market share even in the face of the downturn.

And even if the United States comes off the boil, there is still ground to be made up in Europe.

"Europe has gotten Dell's increasing attention for some time now," Dell says. "In economic terms, it is the largest opportunity outside the U.S., and certainly having these other markets is helping Dell at a time when the U.S. is not particularly strong."

Dell is currently number one or two in eight of the 16 markets it operates in across western Europe, company figures show, with a focus on servers and storage infrastructure.

But even if Europe doesn't fill all the gaps that may appear in the United States, Dell expects the U.S. to rebound soon.

"In the economic downturn we might see purchasers put off expenditure for three or six, even nine months," he says. "But we don't see a lot of companies pushing it out forever."

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