Dell warns of slowing sales, Gateway says all is well

Dell Computer joined Intel Corporation and Apple Computer in announcing that its upcoming sales would be a bit weaker than previously anticipated. However, unlike Apple, Dell sees only a small drop in sales growth for the third quarter, slowing from 30 percent to a still-lofty 27 percent. The world's second largest computer maker blames soft sales in Europe and the small business market for the slowdown. Rival Gateway, however, said that it was "comfortable" with its sales projections, meaning that the company doesn't expect its final figures for the quarter to be much different from projections. Gateway markets most of its machines to consumers, while Dell's sales are largely in the corporate sector.

"There has been some macro-psychology at play with the weak euro,'' Dell Chairman and CEO Michael Dell said this week. "People \[in Europe\] have been significantly less inclined to make expenditures in terms of technology." Dell noted that his company's full-year revenue for 2000 could hit $32 billion, up 27 percent, or $7 billion, from 1999.

Dell had previously promised 30 percent growth for fiscal 2000, but warned that continued soft sales in the fourth quarter would drag this down to 27 percent. One has to wonder how 27 percent sales growth in any market could be considered problematic, but Dell's stock fell 11 percent to $25 after the sales warning was issued. For its part, Gateway has entered the quiet period before it announces its earnings, so the company was characteristically mute about the subject. However, a Gateways spokesperson noted this week that sales in Europe were only a small percentage of the total and that, before the quiet period began, the company had noted that European sales were "outperforming." Gateway will announce its third quarter sales figures next week

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