The Dell Factor

This is a partial transcript from "Your World with Neil Cavuto," May 13, 2004, that was edited for clarity.

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NEIL CAVUTO, HOST: Dell (search), the world’s largest seller of personal computers, reporting higher first quarter profit after the bell. Net income coming in at $731 million, or 28 cents a share, compared with $598 million, or 23 cents, a year earlier. That did meet street expectations. Revenues, though, beat those expectations.

So what impact will these numbers have on the market? With us now from company headquarters, Kevin Rollins, Dell’s President and COO.

Kevin, good to have you back.

KEVIN ROLLINS, PRESIDENT & COO, DELL COMPUTER CORP (DELL): Neil, thanks for having me.

CAVUTO: You know, you stand out for a couple of reasons. Your stock, I think is up in the neighborhood of 10 percent or so, the Nasdaq is down about 7 or 8 percent. What has been helping Dell buck the trend?

ROLLINS: Well, Neil, I think it is just consistent performance. This is the 13th consecutive quarter that we have met or beat guidance for our company. The growth rate is the strongest in the industry. We’re the only company in our industry that’s making money consistently, really at all. And so I think it is just the dependability and consistency of our execution.

CAVUTO: Do you worry, though, Kevin, that could be short-lived? Hewlett-Packard has already indicated its just about ready to sell computers at cost. They didn’t say that, but they certainly dramatically trimmed the price of everything from their laptops to their printers. Do you worry that they’re gunning for you and forcing you into an aggressive price war?

ROLLINS: Well, not a bit, Neil. They’ve been selling them at below cost for probably about four years now. So I think that selling at cost would actually be an improvement for them.

CAVUTO: All right. So you’re not worried about the so-called HP threat, even though some analysts who look at your stock are?

ROLLINS: No, not at all.

CAVUTO: OK. Let’s talk a little bit about the environment. I’m going to be raising it with my market guests soon, but there is some confusion, as all you guys are putting up good numbers -- not necessarily as good as what you just put up -- but some impressive numbers. The stocks have not been rewarded, the technology component of the market has been among the weakest performers in the recent route. What is going on here?

ROLLINS: Well, I don’t know. Technology has been somewhat volatile, and I think people are very concerned about the turnaround.

One of the good news story I think in our report today is that corporate buying has continued to improve. We saw for the first time in about two years double-digit growth in our corporate volume. This quarter to date now that we are in it is in the 20 percent growth range.

So I think people are still a little nervous whether corporate buying is really picking up the way we have been hoping and the way the overall economy is. We are here to say that it has.

CAVUTO: But there is always the proverbial fear that corporate buying slows when corporate costs rise. If their interest rate costs continue to rise, as they are likely to in this year and next, would that put a crimp on whatever fancy technology they want to buy?

ROLLINS: Well, I really don’t think so. I think most of the corporations have got funding this year. And again, I think we are in an interest rate environment, Neil, where the interest rates have been so low that a slight increase wouldn’t be the same as the increase if we were at, say, six, seven percent fundamental interest rates going up.

CAVUTO: OK. Kevin, thank you again. Good talking to you.

ROLLINS: Nice to see you, Neil.

CAVUTO: Kevin Rollins, the guy who runs Dell Computer.

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