PC Playing Field Tilts in Favor of Dell Rivals Try to Streamline Operations to Keep Up
Is Dell Computer Corp. unstoppable?</br></br>The company again blew by its competitors in the personal-computer business in its fiscal first quarter, continuing the tremendous sales and profit growth that has pushed its stock to six times its value at the start of 1997. In revenue, the company just passed International Business Machines Corp.'s PC division to become the world's second-largest PC seller.</br></br>Of course, the company has a way to go to catch market leader Compaq Computer Corp., which is twice Dell's size and growing larger by acquiring Digital Equipment Corp. But Dell, more than any other PC company, is in a position to take advantage of the forces now shaping the industry: accelerating declines in component prices, the pulling together of service and hardware, and close contact with customers.</br></br>Dell's top competitors -- Compaq, IBM and Hewlett-Packard Co. -- are trying to streamline themselves to match Dell's build-to-order and direct-selling efficiencies. But, says Charles Wolf, PC analyst at Credit Suisse First Boston, "The playing field is not getting more level. It's getting more tilted in favor of Dell."</br></br>Despite its first-quarter strength and a bullish outlook for its second period, Dell's stock fell $2.8438 to $91.75 in Nasdaq Stock Market trading. Technology stocks broadly fell after poor results and a sour outlook from chip maker Analog Devices Inc. In addition, investors had built up inflated earnings expectations, anticipating Dell might beat forecasted profit of 42 cents a share by as much as five cents. Instead, Dell on Tuesday said it earned 44 cents a diluted share, or $305 million, in the quarter ended May 3. Revenue grew 52% to $3.92 billion.