Dell Inc's success in cutting prices on products from personal computers to servers and printers has come at the expense of Hewlett-Packard Co (HP).
Dell chief executive officer (CEO) Kevin Rollins on Thursday reported sales and profit that met his predictions and said he's "bullish" about the rest of the year. Nine hours earlier, Hewlett-Packard's CEO Carly Fiorina, 49, released earnings she described as "unacceptable" and cut her forecasts.
The contrast shows that the threat from Dell, which overtook HP as the top PC maker last year, is gathering steam.
Rollins, 51, is gaining share in servers by selling lower-priced pro-ducts straight to customers, and now he's targeting the printer market dominated by Hewlett-Packard for two decades.
"Dell's a machine," said James Lyon, a portfolio manager at Oakwood Capital Management in Los Angeles, which has 72,000 Dell shares among US$400 million of investments. "This is bad news for HP."
Shares of Texas-based Dell rose US$0.88 to US$34 in extended trading after it reported a 29 percent rise in net income to US$799 million, or US$0.24 a share. Sales rose 20 percent. Shares of California-based Hewlett-Packard tumbled US$2.57, or 13 percent, to US$16.95 in NASDAQ Stock Market Composite trading after announcing its results.
Hewlett-Packard's profit, excluding some costs, was US$0.24 a share, missing the US$0.31 expected by 22 analysts in a Thomson Financial survey.
Fiorina said results were hurt in part by "overly aggressive" dis-counting of servers, which run Web sites and data networks.
At Dell's enterprise division, which specializes in servers and storage devices, sales increased 26 percent to US$2.58 billion.
Revenue at HP's enterprise storage and servers unit fell 4.7 percent to US$3.35 billion.
In addition, Fiorina blamed the disappointing figures on a growth slowdown, saying the economy took a "stutter step" at the end of the quarter. Rollins countered by saying he hadn't seen any signs of slowing demand.
"To paint the entire industry with one brush would be ill-advised for investors," Rollins said on a conference call.
Rollins identified HP as "enemy No. 1" in most of its markets in a June "fireside chat" with Merrill Lynch analyst Steven Milunovich.
Dell has overtaken Hewlett-Packard in PCs, nabbing 18 percent of the market globally, compared with HP's 16 percent, according to Massachusetts-based IDC.
In servers, Dell's share rose to 21 percent in the second quarter, while HP's fell to 29 percent, said the Connecticut-based researcher Gartner Inc.
"Dell has been taking share and driving profitable growth," said Paul Cook, director of technology investing at Michigan-based Munder Capital Management, which has 3.37 million Dell shares and 3.14 million HP shares.
"You look at Hewlett-Packard and ask why they cannot adopt similar strategies," Cook said.
Rollins, who took over as chief executive from Michael Dell on July 16, has targeted printers as his next market. He began selling them in March last year and on Thursday boosted his forecast for next year's printer sales to 5 million from 4 million.
In an interview last month, he said he plans to cut printer prices in half and shave as much as 20 percent from the cost of printer supplies.
Fiorina said in a separate interview last month that she is unconcerned by Dell's foray. HP said it ships 1 million printers a week.
Hewlett-Packard had 44 percent of the market for ink-jet printers last year, a business that helped generate 30 percent of sales last quarter and most of its profit.
Hewlett-Packard released the results a week early and pinned some of the responsibility on man-agers. New order-processing software led to delays in shipping products, causing a build up of inventory and forcing the company to send some orders by air.
Fiorina fired the head of business sales, Peter Blackmore, and his US and European deputies.
"It's really a poorly led com-pany," Lyons said. "Her statements are evidence of that."
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