Dell ‘not worried’ of HP-Compaq merger

Luke Baker

ROME: Michael Dell, the chief executive of the world's No.1 personal computer

maker, doesn't worry a bit that two of his biggest rivals have just merged - in

fact, he couldn't be happier.

Hewlett-Packard Co. and Compaq Computer Corp., 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 September 4, both merging companies have

seen their share price crumble and market conditions worsen after the September

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 wasn't

changing its outlook on earnings or revenue growth.

On Monday, Michael 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," he added. In fact, Dell has won 26 new customers

in the past two weeks alone, accounting for $270 million in revenue, the CEO

said.

"I can't say we haven't evaluated acquisition possibilities, but there

just isn't anything worth buying."

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 said 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.

"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. In

economic terms, it is the largest opportunity outside the US.... and certainly

having these other markets is helping Dell at a time when the US is not

particularly strong," he said.

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 US to rebound soon. "In the economic downturn we

might see purchasers put off expenditure for three or six, even nine months. But

we don't see a lot of companies pushing it out forever," the CEO said.

(C) Reuters Limited 2001.