Dell Computer Corp CEO Michael Dell is considering moving the world's second-largest personal-computer maker into the printer market. He may be in for the fight of his career, investors say.
Executives at rival Hewlett-Packard Co, the No. 1 maker of PCs and printers, said they have plans to deal with a Dell encroachment on its most lucrative business.
Dell, which boosted its PC market share to 14.9 percent from 10.7 percent two years ago as it made manufacturing more efficient and passed savings on to customers, is seeking new markets as corporate PC sales stagnate. Hewlett-Packard may be willing to cede its lead in PCs to Dell. That's not the case with printers, a business it will defend with price cuts, patent suits and new products, investors said.
"Things are about to get nasty," said John Spytek, a portfolio manager at Balyasny Asset Management, which owns Dell shares and manages US$300 million. "They're going to take the gloves off over at HP."
The potential battle in printers is one Michael Dell needs to win if he's going to fulfill his promise of doubling revenue from last fiscal year's US$31.2 billion. Growth in PC shipments industrywide is expected to slow to 9 percent annually until 2007, from an average 18 percent a year in the 1990s, according to researcher Dataquest Inc.
Dell later today will report fiscal second-quarter profit of US$0.19 a share on sales of US$8.3 billion, estimates the company gave on July 11. A year earlier, Dell had a net loss of US$101 million, or US$0.04, on sales of US$7.6 billion.
Shares of Dell rose US$1.43 to US$27.15 as of 4pm New York time yesterday on the NASDAQ Stock Market.
The Austin, Texas-based company's stock has fallen 2.2 percent in the past year.
President Kevin Rollins in July said the company will begin making its own printers by year-end.
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