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Friday, 5 October, 2001, 18:17 GMT 19:17 UK
Dell moves ahead in PC battle
Workers in Dell factory
Dell is standing by its previous forecasts
Dell Computer's aggressive pricing strategy seems to be paying dividends in the battle of the computer makers.

The company has said it remains on target to meet its earnings targets, despite the attacks in the US.

But other PC makers are struggling as companies and individuals cut back on buying new machines.

On target

Dell took over from Compaq as the world's leading PC maker during the first three months of this year.

Aggressive price cuts are now helping it to gain extra market share in a stagnant market.

While other firms see their sales slump, Dell is the only major PC maker to find more buyers over the summer for its computers.

On Thursday Dell said it stood by its latest financial estimates, saying sales recovered surprisingly quickly after 11 September, the day of the terrorist attacks in New York and Washington, and for many retailers the start of plunging sales.

"We were actually a little surprised by how fast things rebounded," said Dell's President Kevin Rollins.

Sales fall elsewhere

Demand for PCs is expected to fall in the US this year for the first time in history.

As the economic slowdown bites, companies are trimming IT budgets.

According to research firm IDC, the global downturn could cut worldwide IT spending by $150bn over the next two years.

Meanwhile PCs are now made to a level where home users feel no need to upgrade their computers as often as manufacturers would like.

So as Dell's price cuts have helped it to increase sales, the level of suffering for other computer makers is rising.

Gateway this week blamed the attacks for having to forecast a much bigger third-quarter loss than originally predicted.

Compaq made gloomy predictions as well, which will not help investors confidence in the run-up to the company's planned merger with technology rival Hewlett-Packard.

The two companies hope that the deal will bring cost savings of up to $2.5bn.

Many analysts doubt whether this will be enough to bring the two back to fighting fitness.

At Dell, meanwhile, chief executive Michael Dell remains optimistic about the future, despite the tricky times being experienced by the world's computer industry.

He is convinced that the industry will recover - either during spring or summer next year.

See also:

08 May 01 | Business
Dell to lay off 10% of staff
20 Apr 01 | Business
Dell becomes world's top PC maker
08 Apr 01 | Business
Dell admits hiring too many staff
15 Feb 01 | Business
Dell misses profit forecast
15 Feb 01 | Business
Death of the PC?
22 Jan 01 | Business
Dell warns on profits
08 Dec 00 | Business
Behind the profit warnings
04 Jan 01 | Business
PC sales fall in US
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