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With Rollins at helm, Dell eyes ambitious course

At annual shareholder meeting, new CEO explains how to reach $60 billion revenue goal.

Dell doesn't pause very often or for very long. The PC maker on Friday appointed its next CEO and then quickly moved on to its favorite subject: huge revenue.

Dell, based in Round Rock, Texas, convened its annual shareholder meeting on Friday morning in Austin and, as expected, elevated Kevin Rollins, president and chief operating officer, to the position of president and CEO. But discussion of Rollins' new role quickly gave way to that of Dell's finances and its growing market share.

Rollins used the meeting, his first as CEO, to outline for shareholders how Dell continues to move toward pulling in $60 billion in annual revenue, a goal the company made back in April 2002.

Dell had expected to hit $40 billion in revenue during its fiscal 2004, Rollins said, but instead turned in $41.4 billion for the year, giving the company a higher-than-expected growth rate of 17 percent, versus its own expectation for a 15 percent increase, pushing it that much closer to the $60 billion mark.

Right now, the average prediction of more than 20 financial analysts surveyed by Thomson First Call is that Dell will hit $49.4 billion in revenue during its current fiscal year and $56.7 billion during its fiscal 2006, which actually starts early in 2005.

A smaller number of analysts believe that Dell will hit $64 billion in its fiscal 2007, which starts in early 2006, meaning that Dell will have more than doubled its revenue in the space of four years.

PC shipments have been and are expected to continue being the main engine for Dell's revenue and market share growth. Dell has said in the past that for each point of worldwide PC market share it gains, it takes in an additional $2 billion in annual revenue.

According to shipment results released late Thursday by research company IDC, Dell has gained more market share, capturing 18.3 percent of the worldwide PC market in the second quarter, up from 17.2 percent during the same period last year. IDC includes desktops, notebooks and most servers in its worldwide market share numbers.

Dell must still bring its market share closer to the 30 percent mark to reach $60 billion in revenue, company executives have said. But they have plenty of ideas on how to do that. Dell sells PCs to a wide range of customers, including consumers and small businesses, but it believes that maintaining its focus on corporate sales and international expansion will help it meet its goal.

Dell offers businesses a range of hardware, including PCs and servers, as well as related products, such as data storage systems. The company also offers professional services to help customers tie its various products together.

When it comes to international expansion, Dell has made significant gains in several areas, including Europe and the Middle East, where it claims 13 percent market share; Japan, where it has 10 percent of the market; and Asia-Pacific, where Dell has 7 percent. The PC maker sees plenty of opportunity to continue making additional gains.

"There's absolutely no reason we can't achieve the same gains and opportunities in those (international) markets that we have in the United States," Rollins said.

Although PCs are still Dell's main game, moving into adjacent markets, including printers, will help it reach its goals. Dell's printer line, introduced in March 2003, has been the company's fastest-growing product line to date, Rollins said.

"Printing and imaging are exceeding expectations and will be significant drivers and contributors to our growth this year and beyond," Rollins said.

Hewlett-Packard continues to dominate the printer market, but Dell has made inroads in the United States, Rollins said, gaining 11 percent of the U.S. inkjet printer market, for example.

Life at the top Rollins is only the second CEO in Dell's 20-year history. Rollins and Michael Dell, who remains the company's chairman, plan to continue to running the company together as they have since 2001, when Rollins became president.

Dell praised Rollins' service to the PC maker in front of shareholders. He then showed a humorous video showing what the new CEO's first day on the job might be like.

In the video, Rollins is shown daydreaming about changing the name of the company to from "Dell" to "Kevin" and arriving to the company to be applauded by employees. But instead, as the day unfolds, Dell hands Rollins a list of to-dos. Rollins is then shown watering the plants in the lobby, selling a PC to a customer on the phone, flipping burgers in the cafeteria, sorting mail, taking out the trash and mowing the lawn outside Dell's offices before he returns to the office to fall asleep in his chair.

While it's highly unlikely that he'll spend much time behind Dell's grill or the lawnmower, Rollins has become more involved with Dell's day-to-day operations over time.

Thus, his appointment is a "very well-deserved recognition for the exceptional job he's done and the role he's played at Dell," Dell said.

Shareholders also elected Rollins to Dell's board of directors.

In other business, shareholders shot down a proposal to list employee stock options as expenses; 53 percent of voters sided against the proposal.