Dell Finance Partner Sees Softness Through '07

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Executives at CIT Group, Dell's partner in the Dell Financial Services joint venture, see soft business with Dell through the end of the calendar year, executives told financial analysts during a conference call Wednesday.

The New York-based financing company, in releasing its own quarterly earnings, said it saw weakness in the portion of its business that comes from Dell Financial Services -- which has been a $6 billion-a-year entity that finances consumer and business purchases from the Round Rock, Texas-based PC maker. CIT Group is a 30-percent stakeholder in Dell Financial Services, while Dell owns the other 70 percent.

"We anticipate softness in the Dell business to continue through 2007," said Jeffrey Peak, CIT Group's chairman and CEO.

Dell executives have said in the past that about half of the financings of Dell Financial Services are for consumer sales and about half are for commercial financings. However, Dell has not filed audited financial reports with the U.S. Securities and Exchange Commission since last year.

A spokesman for Dell declined to comment on CIT Group's remarks. Dell has been in the midst of trying to execute a companywide turnaround after a year of soft revenue, earnings and declining market share. But in its most recent fiscal quarter, Dell posted preliminary earnings that beat Wall Street expectations and showed signs of renewed strength. However, Dell CEO Michael Dell has said the turnaround isn't finished.

"We're making steady progress but there's a lot to do," he said last week.

Apart from Dell, Peek also said his company's relatively new relationship with Microsoft as a financing partner has already begun to take root. Peek said that Microsoft is already one of its top 10 vendor financing partners and was on track to be in its top five partners by 2008.

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