UPDATE:Dell Sees Asia-Pac Revenue Up In '10, Stable Gross Margin

Computer maker Dell Inc. (DELL) said Friday it expects its Asia-Pacific operations, including Japan to resume revenue growth next year driven by rising demand in China and India, and sees stable gross margin moving forward on stringent cost management.

Dell said its revenue in the Asia-Pacific region, including Japan for the quarter ended July 31 fell 21% from a year earlier to US$2.0 billion. Its gross margin rose to 18.7% from 17.2% for the quarter.

Despite the continued weakness in information-technology spending worldwide, Steve Felice, Dell's president of small and medium business, said he is seeing encouraging signs of increasing demand in China and India.

"With the strength in China and India, the Asia-Pacific operations will continue to report faster growth than other parts of the world," said the executive.

The executive's comments came after Dell reported a 23% drop in fiscal second-quarter earnings due to lower sales, as it continues to battle weak technology spending, but it said it sees signs of improvement. Felice also confirmed that Dell is in the pilot stage of handset development with China Mobile Ltd. (CHL), the world's largest mobile operator by subscribers.

He said the world's second-largest PC maker by shipments after Hewlett-Packard Co. has yet to set a launch date for the first handset or a price range.

China Mobile spokeswoman Rainie Lei said earlier this month Dell's handset model - mini3i - supports the company's new online platform which offers music, games, videos and other entertainment applications for download to mobile phones.

In recent months, major personal computer makers have been turning their attention to smart phones - mobile devices that offer access to email and support other multimedia functions - as they face stiff competition and pricing pressure.

Finding new ways to grow is especially important for Dell, which has lost market share to major rival Hewlett-Packard and is determined to boost its sales.

-By Lorraine Luk, Dow Jones Newswires; 852-2802-7002; [e-mail]