Dell CEO: PC Growth Slower Than Expected

Growth in the personal computer industry during the first quarter is slower than market leader Dell Inc. (DELL) expected but the company anticipates growing much faster than the rest of the sector, just as it has in other times of turmoil, its CEO Kevin Rollins said Thursday.

In an annual briefing for Wall Street analysts, Kevin Rollins (search) pointed to market research data that forecasts 10 percent growth in first-quarter global PC unit shipments, down from average growth of 16 percent during the prior six quarters.

"As we have come into (the first quarter), it's become clear things are a bit slower (than last year), a little bit slower than maybe we had even thought," Rollins said, referring to the 10 percent forecast by research group IDC.

On Wednesday, Dell left its own revenue and outlook profit unchanged for its first quarter ending later this month, saying it expects revenue of $13.4 billion, up 16 percent from a year ago, and 37 cents a share in profit, up 32 percent.

Shares of Dell rose 32 cents to $38.47 in morning trading on the Nasdaq.

Rollins said the decline in the industry growth rate is "nothing to light our hair on fire about" and that Dell expects to grow significantly faster than the rest of the industry.

Over the past decade, Dell has gained market share faster in years of industry decline than when industry fortunes were rosy, Rollins said.

Rollins ticked off omens of turbulence: IBM is seeking to pull out of the market by selling its PC business to Lenovo , recent management changes at Hewlett-Packard Co. (HPQ) and Sony Corp. (SNE), and struggles facing U.S. rival Gateway (GTW) and other Taiwanese and Japanese competitors.

Dell gained 3 points of market share during the Asia economic crisis of 1997-1998 and 2.5 points of additional market share in the technology bust of 2000-2002, he noted.

"At periods of lesser growth, Dell market share has grown at twice the rate (of) periods of faster industry growth," Rollins said.

Dell's own PC sales grew more than 50 percent faster than the rest of the industry during 2004. Unit shipments of Dell PCs grew 21 percent last year, compared with 13 percent growth in the rest of the industry, excluding Dell's shipments.

Late Wednesday, Rollins told a group of analysts and reporters that he believed HP's newly named chief executive, Mark Hurd, should help stabilize Dell's biggest competitor. This may work in Dell's favor, he said.

"I think there will be places where they decide that they shouldn't be competing," he said.

"Mark is rational enough to say, 'We gotta change,"' Rollins said. "Working with a rational competitor is always preferable."

He added: "(Hurd is) not going to lose a lot of money."