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Dell seeks market share amid uncertainty
Thu May 21, 2009 3:28pm EDT
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By Gabriel Madway
NEW YORK (Reuters) - Dell Inc (DELL.O) is still cautious about corporate technology spending, but plans to make acquisitions and aggressively pursue enterprise customers in an effort to win back market share in the United States.
Steve Schuckenbrock, president of the No. 2 PC maker's large enterprise business, said on Thursday that corporations in general were either cautiously investing or stuck in "hunker-down mode." He estimated the split at around 50/50.
Speaking at the Reuters Global Technology Summit in New York, he said Dell would focus on acquiring new customers in the United States, where its personal computer market share is estimated by market research firm IDC to have fallen to about 26 percent in the first quarter.
"I think we scaled back our attention to that over the last couple of years, particularly in the U.S... we lost share in large customers and we're not going to do that again," Schuckenbrock said.
Hewlett-Packard Co (HPQ.N) overtook Dell as the PC market share leader in the U.S. in the first quarter, according to IDC, boosted by strong demand for consumer notebooks. HP is also the world's largest PC maker, with Dell ranking second.
Dell, which has been working through wrenching cost cuts and headcount reductions, is scheduled to report quarterly earnings next Thursday.
"We're a growth company, (there's) no question we have our eye on the (market) share situation," Schuckenbrock said. "We also have a pretty good eye on margin."
"We have seen some share loss particularly on lower price bands and I think you can expect us to address that," he said.
PCs comprise around 60 percent of Dell's revenue, leaving it more exposed than more-diversified HP to the global slowdown in PC sales brought on by economic weakness.
"We remain cautious about how that spend will come back," Schuckenbrock said, speaking generally about information technology spending. "If I had to guess today, you've got a 50/50 mix of those that are cautiously investing and those that are still in hunker-down mode."
When asked if his customers' budget constraints have eased in May compared to April, he answered, "I can't say I've seen that."
EYEING ACQUISITIONS
Dell Chief Executive Michael Dell has said the company, with around $9 billion in cash and short-term investments, plans to be acquisitive as it looks to diversify its sales base.
Oracle Corp's (ORCL.O) recent move to acquire Sun Microsystems Inc (JAVA.O) changed the competitive landscape in enterprise IT, and many analysts expect further deals in the sector this year, given that valuations are so low.
Although Schuckenbrock declined to comment on potential targets or specific business areas the company may be shopping in, he said Dell is interested in software and services. Continued...
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