DELL Inc will probably post faster sales growth than the overall personal-computer market this year, fueled by demand from emerging markets such as India and China, Chief Executive Officer Michael Dell said yesterday.
"The emerging markets are a big part of our growth," Dell, 43, said in a Bloomberg Television interview in New Delhi. "Dell will continue to grow faster than the rest of the industry, certainly for the remainder of this year."
Dell, in India to promote laptops introduced on Tuesday, has added products and boosted overseas sales to help the Texas-based company beat industry leader Hewlett-Packard Co in sales growth for two straight quarters, Bloomberg News reported. The strategy to increase sales abroad to weather a slowdown in United States demand may erode profitability, according to UBS AG analyst Maynard Um.
"The impact on overall profitability from greater sales abroad remains a concern, as historical operating margins outside of the US have been lower," Um wrote in an August 4 report. Dell's gross profit margin, or the percentage of sales left after deducting production costs, narrowed to 18.4 percent in the three months ending on May 2, compared with 19.3 percent a year earlier. Overseas sales exceeded revenue from the US for the first time in the fiscal first quarter.
Dell increased PC shipments 21 percent in the quarter ended June 30, compared with Hewlett-Packard's 17 percent and 15 percent for the overall market, according to research company IDC. The second-ranked PC-maker also beat California-based Hewlett-Packard in the previous three months, IDC said in April.
Global shipments may increase to about 300 million PCs this year, Dell said earlier yesterday. The forecast is in line with a June estimate by research company Gartner Inc for PC shipments to rise 13 percent to 297 million.
Dell on Tuesday introduced business notebooks with longer battery life. The company also started selling a slimmer laptop weighing 1 kilogram after Hewlett-Packard offered a similar model in June. Dell, which in 2007 abandoned selling PCs only through the telephone and the Internet, has forged agreements to sell its computers through retailers including Wal-Mart Stores Inc in the US, Gome Electrical Appliance Holdings Ltd in China, Carrefour SA in Europe, Bic Camera Inc in Japan and the Croma chain of electronics stores of India's Tata group.
Dell is also adding employees in India to help meet demand in a market that's estimated to grow at four times the pace of the US and where one in a hundred people own a computer.
PC shipments in India will rise 20 percent in 2009 outpacing a 5-percent growth in the US, according to UBS.