Bloomberg News

Dell CEO Sees Slowing Growth in China, Establishes Fund

July 17, 2012

Dell CEO Sees Slowing Growth in China, Establishes Fund

Michael Dell, chairman and CEO of Dell Inc., at the Fortune Brainstorm TECH 2012 in Aspen. Dell established a $60 million venture fund to back data storage startups. Photographer: Stuart Isett/Fortune Brainstorm Tech

Dell Inc. (DELL:US) Chief Executive Officer Michael Dell said the computer maker is seeing a slowdown in China, adding to the list of companies dealing with slackening growth in the world’s most populous country.

“There are some challenges in China right now,” Dell said today at a conference in Aspen, Colorado. He and the company’s board plan to visit the country in early September. Asked whether sales were slowing there, Dell said, “that would be an accurate statement.”

Dell’s comments add the Round Rock, Texas-based company to a growing list of technology businesses facing lackluster sales growth in China. His remarks may fuel concern that electronics makers can’t count on Asia to counterbalance diminished demand in recession-hit Europe or in the U.S., where a recovery is taking hold at a slower-than-predicted pace. Applied Materials Inc. (AMAT:US) and Advanced Micro Devices Inc. (AMD:US) have also pointed to weaker demand in China.

China recorded its weakest expansion in three years in the second quarter, when its economy advanced 7.6 percent from a year earlier, a government report in Beijing showed July 13.

Dell has annual sales of about $5 billion in China, the CEO said today.

Storage Fund

Dell also said the computer maker has established a $60 million venture fund to invest in storage technologies. The fund will back startups that aim to house growing amounts of data at businesses with fewer than 50,000 employees, for example, and those building computer servers with solid-state storage, the CEO said at Fortune’s Brainstorm Tech conference.

“We really believe in this explosion of data driven by smartphones, tablets,” he said “The idea behind the venture fund is to get out in front and fund some of these new ideas we think are going to be interesting.”

Jim Lussier, Dell’s managing director for its venture capital business, wrote in a blog post that the Dell Fluid Data Storage Fund plans to invest $3 million to $5 million per investment round in startups.

“Storage has been a huge area for Dell,” the CEO said today. Dell has acquired storage companies such as EqualLogic Inc. and Compellent Technologies Inc. and is building up its intellectual property in the area, he said.

Shares of Dell fell (DELL:US)less than 1 percent to $12.12 at the close in New York. The stock has declined 17 percent this year.

To contact the reporter on this story: Aaron Ricadela in San Francisco at aricadela@bloomberg.net

To contact the editor responsible for this story: Tom Giles at tgiles5@bloomberg.net


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Companies Mentioned

  • AMAT
    (Applied Materials Inc)
    • $20.89 USD
    • 0.41
    • 1.94%
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