PC Sales to Rise 20 Percent, Dell Says
Posted on: Friday, 12 November 2004, 12:00 CST
Nov. 12--Dell Inc. shrugged off a slowing consumer market Thursday, saying businesses are buying enough computers to make the fourth quarter even better than the third.
Shares of Dell, which is based in Round Rock, Texas, rose 40 cents to $37.25.
Dell predicted that its shipments would rise 20 percent in its fiscal fourth quarter, which ends in January.
That would produce quarterly sales of $13.5 billion, up 17 percent from last year, and earnings per share of 36 cents, up 24 percent. Both figures were in line with analysts' expectations, according to Thomson First Call.
In the third quarter, Dell overcame an early stumble in its computer server line and enjoyed a 35 percent increase in notebook computer shipments.
The company had third-quarter income of $846 million, or 33 cents per share, up from $677 million, or 26 cents. Sales grew to $12.5 billion from $10.6 billion.
Consumer spending remains healthy, said Dell chief executive Kevin Rollins.
"It's a little less than it was in the heyday frenzy at the end of last year and beginning of this year," he said. "Anytime you don't see something continue at a torrid pace, everybody think it's way off."
Dell's shipments of servers, which run back-office computing functions for businesses, grew 19 percent from a year ago.
The company phased in a new product line for some units during the quarter, causing sales to slow in the beginning of the quarter and to improve dramatically at the end, Mr. Rollins said.
The company's line of notebook computers benefited from lower component prices, particularly for flat displays and memory, he said.
When component prices fall, Dell often uses the savings to quickly lower prices, often leading to a spike in sales.
Dell hinted tantalizingly Thursday that it's considering a new component processor chips made by Advanced Micro Devices Inc.
Dell's only supplier for those chips is market leader Intel Corp., and the computer maker has been loath to move away from that tight relationship.
In the past, Dell said it constantly considers new components but had no plans to introduce an AMD-based product, and AMD has revealed nothing. But Mr. Rollins went a step further Thursday in a conference call with news media.
"They have some products that have come a long way in terms of technology," Mr. Rollins said. "Some have advanced past Intel. We're looking at it very closely, but we have nothing new to announce."
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Source: The Dallas Morning News
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