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Dell sees early signs of Asian companies spending more on IT

Dell sees early signs of Asian companies spending more on IT

Dell's Asian revenue was down sharply during the second quarter, but the company said the business outlook is getting brighter.

Dell's revenue from the Asia-Pacific region, including Japan, fell 21 percent compared to last year, to around US$2 billion. That number, which represents roughly 20 percent of Dell's overall second-quarter revenue, was basically flat from the previous quarter, but the numbers indicate that demand in key Asian markets is getting stronger.

"We have started to see encouraging signs out of China and India; we saw good, healthy sequential growth there," said Steve Felice, president of Dell's Small and Medium Business unit, during a conference call with reporters.

While more developed economies in the Asia-Pacific, including Singapore, Australia and Malaysia, continued to be challenging, there were sequential improvements during the second quarter that hint at stronger demand in the quarters ahead. Excluding Japan, revenue from Asia-Pacific countries grew 11 percent on a sequential basis, Felice said.

Importantly, Dell saw stronger demand for computers and other products from corporate buyers across Asia, excluding Japan. "We are still not into a year-over-year improvement, but these are good signs," he said.

Bryan Ma, director of personal systems research at IDC Asia-Pacific, saw similar improvements in corporate PC demand.

"It will obviously vary by country but , in general, we are starting to see some encouraging signs," Ma said, adding that companies in certain sectors, such as the oil and gas industry in Indonesia, will likely lead a recovery in IT spending.

"It's not going to be an immediate recovery, it's going to take some time to improve," Ma said. "If this trend continues, the outlook will slowly start brightening as we move into 2010."

Corporate IT sales are critical to Dell, which depends heavily on companies for PC sales in Asia. While Dell has made good strides building its consumer business - Felice said the company's second quarter retail sales were "very healthy, especially in China" - consumers still represent a relatively small percentage of Dell's Asian business compared to rivals Hewlett-Packard and Acer.

Dell hopes to see its Asia-Pacific revenue show increases on a year-over-year basis sometime next year, Felice said, citing analyst forecasts of stronger Asian demand for PCs. But that is "very dependent" on what happens to the worldwide economy, he said.


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