| HOME | NEWS ALERTS | SMK RECOMMENDATIONS |

The Round Rock, Texas company dropped "Computer" from its name, as shareholders at the company's annual meeting endorsed Dell's diversification into the data storage and printer markets. But shareholders at the Austin, Texas, meeting got no joy when some asked the cash-rich company to start paying a dividend.

Dell executives said the more than $5 billion the company has stashed in the bank could be put to better use buying back stock and funding their ambitious plans to double sales to $60 billion.

"We would rather spend available cash flow on share repurchase rather than on a dividend," said chief financial officer Jim Schneider. "We think that's a better use of the money."

He said Dell had bought back a billion shares since 1996 at an average cost of $12 a share.

"I'd like to get some return on my investment," complained one shareholder.

"How about a 50,000 percent return? Would that do it?" asked chief executive Michael Dell (News), referring to the increase in value of Dell stock since he founded the company out of his University of Texas dorm room in 1984.

IT SPENDING SEEN STABILIZING

Michael Dell also said that demand for information technology, or IT, is stabilizing.

"We look back on the past year, and looking forward, we're seeing some signs of improvement and stabilization in the IT market. Customers are feeling better about the environment," Michael Dell said. He made similar comments at a meeting with reporters in June.

But he said managers are risk averse in terms of buying new equipment. "So it's going to take a few more quarters for dramatic improvement and for IT budgets to really grow," Michael Dell said.

Dell -- which continually vies with Hewlett-Packard Co. (NYSE:HPQ - News) for the rank of No. 1 PC maker -- had seen its stock soar for years during the stock market boom of the Clinton era, but has stagnated in recent years, prompting more shareholders to ask for a dividend.

Many technology companies traditionally have not paid dividends, preferring to keep the cash for growth or acquisitions. But a reduction in the top U.S. tax rate on dividends and growing piles of cash are prompting some tech companies to change.

In January, Microsoft (NasdaqNM:MSFT - News) -- the world's largest software company, which has $49 billion in cash and short-term investments -- announced plans for its first ever annual dividend of 8 cents a share.

Share buybacks can add to earnings per share because they offset new shares issued through stock options or decrease the number of shares outstanding.

Chief Financial Officer Jim Schneider told the meeting Dell may reconsider the dividend issue in the future.

LOOKING TO BOOST GLOBAL SHARE

Michael Dell told shareholders the company is looking to increase its global market share as part of its strategy to double revenues from 2002's $30 billion.

Dell has about 32 percent of the U.S. market, but much lower share in the rest of the world.

"If we could increase our share in global markets to match what we have in the U.S., we'll increase the size of our company two times and add another $50 billion in revenues," Dell said.

Dell has continued to grow its market share despite stagnant demand in a weak economy. But Chief Operating Officer Kevin Rollins said there were positive signs in the economy, with perhaps the prospect of better days ahead.

"We're very, very hopeful," he said.

Dell spent much of the meeting discussing environmental initiatives, including the disposal of old computers and the reduction of harmful chemicals in the manufacturing process.

The company, like other computer makers, has been under pressure from environmentalists to address the growing problem of "e-waste" as millions of computers become obsolete. One shareholder said 500 million computers were expected to reach that status by 2007.