Dell CEO Sees Better Days Ahead in '08
Dell expects to expand its profitability this year as the company shifts its resources to faster-growing emerging market regions, Chief Executive Michael Dell said Tuesday.
Dell , in his first official visit to Israel, told reporters that the world's second-largest computer maker was working to reduce costs to make its retail business profitable.
"We are not thinking in a short-term context but a long-term context," Dell said. "Last year growth in EPS (earnings per share) was 15 percent year over year. We have a goal to increase our EPS, and we have the right plans in place to grow EPS on a healthy basis."
He reiterated a plan for the company to buy back another $1 billion of its own shares in the current quarter after repurchasing $4 billion in the fourth quarter.
Last year, Dell broke away from its direct-sales model to sell computers in retail outlets in the Unites States.
Much of the company's growth, however, was from outside the US, in areas such as the Middle East and China, where unit sales were growing between 54 and 70 percent a year.
"We are seeing accelerated growth from emerging economies all over the world," Dell said, projecting that by 2011 half the units sold in the industry would be in emerging countries as more than 500 million new businesses would be created.
In Israel, for instance, the number of units Dell sold grew 67 percent in 2007 through 11 resale partners, and the company said it grew even faster in the first three months of 2008.
"This year, we will grow faster than the industry. What that growth will be, anyone knows," Dell said. "But our growth this year will be pretty healthy."
He said the US and global economic downturn was "creating caution in the buying process," so resources were being redirected to growth areas.
"China is the third-largest country in world for us to sell our products and is growing quite fast in all aspects of Dell's operations," he said.
Dell said the company would be launching a host of new products this year, including a computer to compete with industry leader Hewlett Packard's new $500 mini-notebook.
"We do see opportunities for very interesting products -- smaller and lighter and those that address the more mobile user in a very cost effective way," Dell said.
He said that while there would be devices in the future that "blur the line" between smart phones and computers, "in the near term, Dell will be focused on devices ... you think of as computers. There are a lot of opportunities to grow in the core business we are in."