Home Retail Dell justifies roping in retailers

    Dell justifies roping in retailers


    The founder of Dell, world’s second biggest personal computer maker, Michael Dell, faced analysts for the first time today since taking back the top job at Dell Inc and cited the roping in of retailers as reason for highest sales growth in a year of his product.

    Dell is expected to put forward third-quarter sales which rose 6.4 per cent to $15.3 billion, according to analysts’ estimates compiled by Bloomberg.

    The 42-year-old founder took the reins in January after Dell lost the lead in PC sales to Hewlett-Packard Co. He has remade his company in its rival’s image, drafting the world’s largest retailers, including Wal-Mart Stores Inc and Carrefour, to sell products.

    Dell has agreements with chains in the world’s 10 biggest economies, fueling sales growth overseas and helping to offset a drop in the U.S.

    “They are making the right moves,” said Brian Alexander, an analyst with Raymond James & Associates in St. Petersburg, Florida, who recommends buying the shares and doesn’t own any. “Dell is trying to become a different company.”

    Helped by cheaper PC parts, profit at Round Rock, Texas- based Dell may have risen to 35 cents a share from a restated 27 cents a year ago, according to the survey of analysts.

    Dell, who once shunned stores in favor of online and telephone marketing, decided to move beyond direct sales after revenue and profit growth slowed in 2006 to their lowest levels in four years. Consumers had criticized the company for poor service just as they began to buy more laptops, fueling sales growth at most PC makers.

    Many shoppers flocked to Hewlett-Packard, which sells its machines through more than 100,000 retailers, giving consumers a chance to handle the products before they buy. The Palo Alto, California-based company reported a 30 percent jump in PC sales in the three months ended Oct. 31 after winning orders away from Dell.

    Dell’s retail efforts may be making a difference. The slump in Dell’s shipments in the U.S., the world’s largest PC market, is abating. Shipments fell 4.8 per cent in the third quarter, compared with an 11 per cent drop in the second quarter and 14 per cent in the first, according to researcher IDC of Framingham, Massachusetts.

    Worldwide, Dell’s shipments rose 3.8 per cent, led by Europe and Asia. Sales outside the U.S. accounted for 44 per cent of Dell’s revenue last year.