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iPod helped turned around Apple: Dell CFO

Posted by iTech - 2005-11-17

A senior Dell Inc. executive on Tuesday said that his company is far behind rival Apple Computer Inc. in digital music, adding that the phenomenal success of Apple's iPod music players have reinvigorated sales of Apple's Mac computers.
"We're obviously not competing very well," with the iPod, Dell Chief Financial Officer Jim Schneider said at a Raymond James investor conference in New York that was broadcast on the Internet.

"Apple has come out with a nice product and I think it's really turned their company around," he said, responding to analysts' questions about Dell's recent earnings disappointments.

Dell last week said that third-quarter profit was down 28 percent, as sales to U.S. consumers dropped and business in the United Kingdom disappointed the company.

Dell, the world's largest PC maker, also issued a sales forecast that left some analysts wondering if the company has lost the growth momentum of recent years.

By comparison, Apple posted record revenue and sales in its most recent quarter.

Mac computers are showing their strongest sales in years, growth that some analysts say is driven by the iPod phenomenon. Sales of Mac desktop units climbed 56 percent from a year earlier and notebooks sales were up 48 percent in the fiscal fourth quarter. iPod sales tripled during the same period.

Apple's retail stores are busy with iPod-hungry shoppers. Some end up browsing the Mac aisles and buying the machines that are generally more expensive than computers from rival PC makers such as Dell, Gateway Inc. and Hewlett-Packard Co.

Apple recently introduced two iPod models for the holiday season -- a tiny "nano" version and one that plays video. Altogether it's sold some 28 million music players since the device was launched in 2001.

Meanwhile, Dell recently rebranded its digital music players, dubbing them Dell DJs, which stands for digital jukebox. They are flashier than previous Dell music players that have lacked the cachet of iPods.

Dell's marketing efforts include a special bundle with a tiny "DJ Ditty" MP3 player, pink earbuds and a wristband from the Susan G. Komen Breast Cancer Foundation. Dell says it is making a donation to the foundation for each device it sells. It's also offering customers $50 rebates.

"Adopting an active lifestyle is an important part of decreasing your cancer risk," Dell says on its Web catalog. "And Dell's music players are the perfect accessory for enjoying an active, healthy lifestyle."

Dell shares rose 42 cents, or 1.4 percent, to $29.88 in morning Nasdaq trading.

The stock is now valued at about 16.5 times the average analyst forecast for next year's earnings per share, according to Reuters Estimates.

Apple is trading for about 29 the coming year's profit forecast.

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