Tech spend yet to take off: Dell

NEW YORK: The technology spending budgets of big companies have yet to grow rapidly despite evidence of an economic turnaround, Dell Inc. Chief Executive Michael Dell said.

"The large corporations tend to be the slowest to react to changes in the economy," Dell told a technology investing conference in New York. "They have budgets, and the budgets were set last year when things weren't so good. So the budgets aren't really changing that fast."

Also, many larger companies have had to lay off staff, which may dampen corporate demand for new information technology.

"There are opportunities, but there just isn't a tremendous amount of demand and activity (there)," he said at the Smith Barney 2003 technology conference.

The most notable growth is in consumer and small business markets, he said.

"If their business is growing, they say 'we have to go and get some more computers,'" Dell said.

Geographically, Dell said Asia has performed particularly well.

"I think Asia is just a hotbed of activity, post-SARS," he said, at the Smith Barney 2003 technology conference. The outbreak of Severe Acute Respiratory Syndrome earlier this year appeared to delay spending decisions on technology.

Shares of Dell rose 98 cents, or 3 percent, to $33.59 on the Nasdaq, not far from its 52-week high of $34.52.

Dell also said wireless networking, bigger screens, and more powerful processing ability is leading to more demand for laptops.

He also addressed the move by some technology companies to reduce or eliminate the use of stock options for employee compensation. He likened the trend to the disarmament movement in the nuclear arms race, with technology companies watching one another's decisions carefully before acting.

"This year we basically cut the options grants in half," said Dell, who was named the richest person under 40 by Fortune magazine on Tuesday. "It has gotten to be sort of like the nuclear arms race, where these things were bid up irrationally. Hopefully, companies like Intel will disarm and this thing will start to get much more rational."

© Reuters