Dell CEO takes dig at Lenovo

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Dell’s CEO took some shots at rival Lenovo, and gave a qualified vote of confidence to chip maker Intel, in remarks at an investor conference hosted by Goldman-Sachs.

Dell’s CEO took some shots at rival Lenovo, and gave a qualified vote of confidence to chip maker Intel, in remarks at an investor conference hosted by Goldman-Sachs.

Kevin Rollins, Dell's CEO, also said the company seemed to have overcome problems that caused it to miss analyst expectations during the second and third quarters last year, but was still looking at a relatively small single-digit growth for 2006.

But, in response to questions during the one-hour session, Rollins portrayed the company as still strong compared to competitors.

Specifically, he was asked about Lenovo, the company that last year bought the former IBM PC business and changed from a focus on only the Chinese market to global sales. Rollins suggested it was not difficult to analyse Lenovo’s challenges.

“Really, they are still very China-centric,” Rollins said. “If you look at where they’d grown, where their profitability resides, it's still a Chinese business.” He said Lenovo had questionable profitability.

“Their growth is actually deteriorating. The question is, can they continue to compete globally, versus continuing to compete in China,” Rollins said. “It's why they changed their CEO, I assume.”

Late last year, Lenovo tapped William Amelio, who was then a Dell senior vice president for Asia-Pacific, to take over as CEO, replacing Steven Ward.

In response to an audience question about Dell executives who have recently chosen to leave the company, Rollins indicated it was not a big deal for his company.

“Some have left because they were drawn away by an opportunity we could not give them. Some, we were fine with them leaving,” Rollins said.

“And you'll have to figure out which is which … If there is someone who just wants desperately to have a CEO title, they’re not going to get it at Dell,” Rollins said. "They’ll have to get it somewhere else.”

Dell, which has also publicly toyed with the idea of shifting from its Intel-only strategy for processors in its notebooks, desktops and servers, is sticking with Intel for now.

But, Rollins did not appear eager to take any pressure off the chip maker.

“Intel is the partner of record,” Rollins said. “We are pleased with them. They are making good advances, we cheer them on to do those kinds of things. But we'll have to watch to see if those are the right things for our customers and shareholders.”

Specifically, Rollins said, Dell is keeping an eye on Intel's forthcoming Woodcrest processor for servers - and will test and evaluate the product, which is set for release in the second half of 2006.

“There are multiple decision points” on processors, Rollins said. “Is Intel going to meet the technology needs-–server performance and thermals–-where AMD does have a lead? That will answer the question. If they don't, that will also answer the question.”
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