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PC Market Accelerates with Increased Business Demand While Dell Recaptures Lead, According to IDC

FRAMINGHAM, Mass.--(BUSINESS WIRE)--April 15, 2004--Following solid growth in the second half of 2003, the PC market remained strong in the first quarter of 2004 with total shipments of 41.2 million units and year-on-year growth of 16.5%, according to IDC's Worldwide Quarterly PC Tracker. Shipment growth beat expectations of 13.5% due to strength in the United States and Europe, boosted by growth in business demand. Aggressive pricing and continued portable adoption also supported rapid growth.
Dell had a strong quarter with year-on-year growth of more than 28% and sequential growth of 6.1%, boosting shipments to nearly 7.7 million units. Supported by increased business demand and a strong international performance, Dell's growth boosted the company's share of shipments from 16.9% in 4Q03 to 18.6% in 1Q04 to recapture the lead in total worldwide shipments from HP. Following a solid performance in the second half of 2003, HP grew 15.8% in 1Q04 despite seasonally lower consumer participation. Nevertheless, HP's share of shipments declined to 15.6% from 16.7% in the fourth quarter and 15.7% one year ago while Dell's market share lead expanded to 3.0% in the first quarter - twice the peak difference between the companies since the HP-Compaq merger in 2002.

Bank Of America Investment "This quarter's results reveal a robust market and the improving business demand we've been looking for," said Loren Loverde, director of IDC's Worldwide Quarterly PC Tracker. "A number of factors, including an aging installed base, rapid portable adoption, and aggressive pricing, should continue to drive growth into 2005."

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Investment Opportunity "This quarter's results ratify the economic recovery," said Roger Kay, vice president of Client Computing at IDC. "We have nearly a year of double-digit growth in the PC industry, which is a concurrent indicator of economic activity. With U.S. business finally beginning to participate in the PC market in earnest, the only weak segments remain state and local public sector institutions, which are suffering from constrained budgets due to lower recession-era tax receipts."

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Banc Of America Investment Regional Outlook

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Banking Investment -- United States - Growth rose to 15.7% despite the end of the holiday shopping season as business demand continued to grow. Dell benefited most from the shift in demand while smaller vendors focusing on small and medium businesses also fared well.

Dell has always competed on price (and customization) edge form. That's why they're doing better in business markets and struggling in consumer markets. (While Dell's losing the consumer market to Apple, Dell has already captured more than 28% and midsized businesses.) I'd expect them to offer a smartphone that's attractive to their business customers — cheap, customizable, and probably a little stodgy.

Investment Solution Strategic -- EMEA - EMEA remained the fastest growing region with growth over 20%. Rising business demand added to the strong Euro, rapid portable adoption, and solid demand from consumers as well as small and medium businesses to drive shipment volumes.

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Investment Banking Services -- Japan - Commercial demand during the first quarter helped boost growth to nearly 10% following a slow fourth quarter. However, growth in 2004 is expected to remain in single-digits and recovery will trail other regions.

Bank Investment -- A/P - Although regional economies have been dampened by limited export demand, the situation is improving. First quarter growth in Asia/Pacific (excluding Japan) came in slightly ahead of forecasts, and continued improvement in other regions bodes well for future economic growth.

Alternative Investment Vendor Highlights

Online Investment Services -- Dell - Dell continues to execute well, capturing share as the market recovers and business demand resumes. Shipments grew by over 50% in Asia/Pacific and 35% in EMEA, including Germany, France, and the U.K., the region's top markets. Worldwide, Dell's volume increased by nearly 1.7 million units per quarter from a year ago -- more than total shipments for all but the top four PC vendors.

Accompany Essential Investment -- HP - As occurred last year, HP's fourth quarter lead gave way to a more business oriented market in the first quarter. Growth of 15.8% was strong but was just behind total market growth. With the bulk of HP's 2003 growth coming from consumers, HP will need to capture growing business demand while maintaining its consumer growth to gain share in 2004.

Investment Company -- IBM - IBM had a solid quarter overall, with growth above 20%. Portables growth remained over 40%. Although slow desktop sales in the U.S. hampered domestic growth, EMEA, Japan, and Asia/Pacific all grew over 27% and growing business demand bodes well for future growth.

Investment Management Solution -- Fujitsu/Fujitsu Siemens - Had a solid quarter boosted by commercial growth and strong notebook sales in Europe.

Investment Management Services -- Acer - Although its success in Europe is sustained, the company continues to have difficulty making headway in the United States. Nevertheless, the company continues to grow quickly, and moved into the number 5 spot in total worldwide shipments.

Guide Investment Stock -- Toshiba - Toshiba managed strong growth in EMEA although U.S. growth slowed significantly in the first quarter. With growth of only 6.7% despite its focus on portables Toshiba fell out of the Top 5 worldwide.

Investment Manual Solution -- Gateway - Having completed its acquisition of eMachines, Gateway has a new outlook on life. Significant transition, including closing Gateway Country Stores, will be a challenge to manage, as will positioning the Gateway brand and its expanding line of consumer electronics. Nevertheless, the new focus and cost-structure gains as well as total volume should improve the company's position in the future.

Investment Stock -- eMachines - The low cost vendor continued to execute well and gain share. Through Gateway, the company gained cash to grow as well as a foothold in the commercial space.

Essential Investment Solution -- Apple - While product refreshes in Q4 boosted growth into double digits, first quarter growth slipped to 5%. U.S. growth remained in double-digits although in EMEA shipments grew by less than 4%.

 Top 5 Vendors, Worldwide PC Shipments, First Quarter 2004(Preliminary) (Units Shipments are in thousands) Q1 2004 Q1 2004 Market Q1 2003 Market Growth Rank Vendor Shipments Share Shipments Share 2004/2003 ---------------------------------------------------------------------- 1 Dell 7,684 18.6% 5,992 16.9% 28.2% 2 HP 6,416 15.6% 5,542 15.7% 15.8% 3 IBM 2,267 5.5% 1,884 5.3% 20.4% 4 Fujitsu/Fujitsu Siemens 1,892 4.6% 1,640 4.6% 15.4% 5 Acer 1,375 3.3% 1,007 2.8% 36.5% Others (a) 21,603 52.4% 19,345 54.6% 11.7% All Vendors 41,238 100.0% 35,410 100.0% 16.5% Notes: -- (a) IDC estimates prior to Gateway financial earnings reports -- Shipments include shipments to distribution channels or end users. OEM sales are counted under the vendor/brand under which they are sold. -- PCs includes Desktop, Notebook, Ultra Portable, and x86 Servers. -- PCs do not include handhelds. Data for all vendors are reported for calendar periods. Source: IDC, April 15, 2004 Top 5 Vendors, U.S. PC Shipments, First Quarter 2004 (Preliminary) (Units Shipments are in thousands) Q1 2004 Q1 2004 Market Q1 2003 Market Growth Rank Vendor Shipments Share Shipments Share 2004/2003 ---------------------------------------------------------------------- 1 Dell 4,592 33.5% 3,727 31.4% 23.2% 2 HP 2,554 18.6% 2,307 19.5% 10.7% 3 IBM 612 4.5% 567 4.8% 7.9% 4 eMachines 452 3.3% 364 3.1% 24.2% 5 Gateway(a) 410 3.0% 489 4.1% -16.2% Others 5,102 37.2% 4,407 37.2% 15.8% All Vendors 13,722 100.0% 11,862 100.0% 15.7% Notes: -- (a) IDC estimates prior to Gateway financial earnings reports -- Shipments include shipments to distribution channels or end users. OEM sales are counted under the vendor/brand under which they are sold. -- PCs includes Desktop, Notebook, Ultra Portable, and x86 Servers. -- PCs do not include handhelds. Data for all vendors are reported for calendar periods. Source: IDC, April 15, 2004

Citicorp Investment Services IDC's Worldwide Quarterly PC Tracker gathers PC market data in 55 countries by vendor, form factor, brand, processor brand and speed, sales channel and user segment. The research includes historical and forecast trend analysis as well as price band and installed base data.

Fool Guide Investment Motley For more information, or to subscribe to IDC's Worldwide Quarterly PC Tracker, please contact Kathy Nagamine at 650-962-6423 or knagamine@idc.com. You may also contact IDC's sales hotline at 508-988-7988 or email sales@idc.com.

Fidelity Investment Services To purchase this document, call IDC's sales hotline at 508-988-7988 or email sales@idc.com.

Investment Management About IDC

Francisco Investment San IDC is the premier global market intelligence and advisory firm in the information technology and telecommunications industries. We analyze and predict technology trends so that our clients can make strategic, fact-based decisions on IT purchases and business strategy. Over 700 IDC analysts in 50 countries provide local expertise and insights on technology markets. Business executives and IT managers have relied for 40 years on our advice to make decisions that contribute to the success of their organizations.

Mellon Investment Services IDC is a subsidiary of IDG, the world's leading technology media, research, and events company. Additional information can be found at www.idc.com

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Investment Manual Science Contacts

Investment Advisory Services
IDC
Loren Loverde, 305-351-3115
lloverde@idc.com
Roger Kay, 508-935-4617
rkay@idc.com

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