Of all the good news Dell Computer Corp. (DELL
) can record in its 2002 annual report, one item stands apart: On Nov. 16, the company made its highest appearance ever in the TOP500, a closely watched ranking of the world's speediest supercomputers put together by a consortium of computer scientists. At No. 22, Dell's entry was no ordinary PC but a colony of thousands of inexpensive servers linked together to equal the power of a mainframe. If anyone in the tech biz still needed proof that CEO Michael S. Dell is shooting for dominance beyond the desktop, this was it.
With Dell's 11.8% stake in the Austin (Tex.) company he founded 18 years ago now worth a cool $8.5 billion, you might expect to find him kicking back on a beach, not plotting a brash foray into the rarefied supercomputer market. But at 37, the boyish-looking Dell is still delivering growth and showing no signs of easing off his weary rivals.
And he's doing it all at a nice profit. Sales in the first nine months of 2002 reached a record $25.7 billion, an 11% increase, and net income jumped 15%, to $1.5 billion. PC sales are draining profits from competitors, but thanks to relentless efficiency improvements, Dell's operating margin grew to 8.3% in the most recent quarter from 7.3% a year before. The industry is still struggling with weak-as-water tech spending, but shipments at Dell grew 28% in the quarter that ended Nov. 1. And just three months after losing the top spot in global PC sales to Hewlett-Packard Co. (HPQ
) (as a result of HP's merger with Compaq Computer Corp.), Dell grabbed it back in October, boosting its share more than a point, to 16%, according to IDC. Dell is No. 1 in notebooks, workstations, and Intel-based servers, too. In a year when many tech stocks were walloped, Dell's price has held steady.
Wondering about Dell's next move? Take a look at HP's strongholds. Dell is attacking the tech icon's cushy market share in storage gear and networking equipment and just rolled out a $199 handheld that undercut HP's popular iPAQ by half. In 2003, Dell will strike right at HP's heart with a line of low-priced printers and cartridges. Now that's a supercharged strategy.
KEY ACCOMPLISHMENTS
-- Reclaimed top rank in global PC sales with a 16% market share, besting rival Hewlett-Packard's 15.5%
-- Despite lackluster tech spending, boosted quarterly revenue to a record $9.1 billion in November
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