Asia Shines for Dell Despite Economic Downturn

Dell has posted strong revenue and profit growth in Asia, even as the company saw its global revenue and profits decline in its third quarter, which ended October 31.

Encouraged by the growth in the region, the company is planning more investments in call centers in India, and research and development in China. The extent to which it will invest, however, will depend on how the global economic climate shapes up, said Steve Felice, president of Dell Asia Pacific and Japan in a conference call on Friday.

Dell reported Thursday that worldwide revenue for the third quarter was US$15.16 billion, a 3 percent drop compared to the third quarter of last year. Profits dropped 5 percent to $727 million.

Although Asia helped boost Dell's results in the third quarter, it still accounts for just 16 percent of the company's total revenue. The key new growth markets in the region - India and China - accounted for about 5 to 6 percent of Dell's overall revenue, which is not large enough to offset the impact of the economic downturn in the US which accounts for about half of Dell's business, Felice said.

Dell's revenue grew 11 percent in Asia, including Japan, in the quarter, while unit sales grew 29 percent. Profits more than doubled compared to the same time last year, Felice said.

In China, the company saw its revenue grow 18 percent, while unit sales grew 44 percent. In India, unit growth was 77 percent, while revenue growth was 48 percent.

Growth in India came largely from increased market share in the consumer and small and medium business (SMB) segments, even as there is an overall slow-down in industry spending, Felice said.

The company will continue to focus on these two markets in India, where its share is still small, besides its mainstay corporate market, he added.

Spending in China on IT is difficult to predict, but new investments in infrastructure in China, including a $586 billion stimulus package for the economy announced by the Chinese government, could create demand for IT products, Felice said.

In April, Dell said it wanted to save US$3 billion by 2011 by reducing its headcount and procuring cheaper materials and components. Cost cutting in Asia will probably be minimal, as the company's business continues to grow fast in the region, Felice said.

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