Dell sees 2009 contraction in Asia amid sales slump

TAIPEI Fri Feb 27, 2009 1:46am EST

A Dell Latitude D430 laptop computer is seen in New York August 26, 2008. REUTERS/Brendan McDermid

A Dell Latitude D430 laptop computer is seen in New York August 26, 2008.

Credit: Reuters/Brendan McDermid

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TAIPEI (Reuters) - Dell Inc DELL.O expects its Asia revenue to fall this year, amid heated competition and the global slowdown, but it still expects to pick up share in the PC markets in China and India, a top executive said on Friday.

Asia Pacific revenue for Dell, the world's No. 2 PC maker, slipped 12 percent in the fourth quarter from a year earlier due to a sharp decline in demand, Steve Felice, regional head of small and medium businesses, told reporters in a teleconference.

"We really don't know the length and depth of this slowdown," said Felice. "Our anticipation is that this will continue, and we do expect a contraction in the calendar year 2009."

While regional revenue growth could contract, Dell said it is still aiming to maintain or boost its market share this year in China and India as it continues to expand its footprint in two of Asia's biggest markets.

Dell's share of the overall PC market in China grew by 21 percent in 2008 to 8.5 percent of the overall market, while its market share in India grew by 24.2 percent in the final quarter of last year, according to research firm Gartner.

"We always want to grow at or faster than the market, and we haven't changed our goals," said Felice. "We want to grow faster than the overall industry."

Research firm IDC expects the overall PC market in China to grow by 4 percent this year in terms of revenue, while it expects India to contract by 3 percent.

Dell posted a sharper-than-expected fall in quarterly revenue on Thursday as consumers bought cheaper personal computers and overall demand remained weak, but cost cuts helped profit beat Wall Street forecasts.

The company is in the midst of a broader overhaul first announced last year and spearheaded by founder Michael Dell.

When asked about possible job cuts, Felice declined to go into specifics, but said that Asia had seen the least number of cuts compared with other regions, and he expected the trend to continue.

"Headcount cuts are very low in Asia, and we intend to keep it that way," he said. "We have increased employment in areas where there is a need, and we still have a substantial headcount in many markets."

Some analysts say Dell is more vulnerable to the slump in PC and computer hardware demand compared with global leader Hewlett-Packard (HPQ.N), and investors have beaten down Dell's shares more than 65 percent over the past six months.

In contrast, HP's shares are down about 35 percent over the same period. Dell also competes with Taiwan's Acer (2353.TW) and China's Lenovo (0992.HK), the world's third and fourth biggest PC brands, on the global stage.

The PC sector stood relatively resilient against a larger slump in the tech industry last year, but it too has now been caught in the deepening economic slowdown that has hit demand from consumers and corporate buyers.

(Additional reporting by Kaustav Roy in Mumbai; Editing by Ken Wills)

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