Dell Posts Rise in Third-Quarter Revenue, Profit
Posted on: Friday, 14 November 2003, 06:00 CST
Nov. 14--Dell Inc.'s third-quarter revenue and profit surged despite tough competition and higher-than-expected costs for component prices, the computer maker said Thursday.
Rivals anticipating an economic recovery kept prices low, even as prices for computer memory and flat-panel display technology stayed higher than Dell had anticipated, said Kevin Rollins, president of the Round Rock-based company.
Dell outpaced its competitors' growth by building a bigger share of markets in Europe and Asia, most importantly in Japan and China, the company said.
And Dell improved its income by selling more expensive, profitable machines such as servers and storage devices to its corporate customers.
"Our sales of servers, storage and services led the way for us this quarter," chief executive Michael Dell told reporters in a conference call.
Dell had third-quarter income of $677 million, or 26 cents per share, up from $561 million, or 21 cents, a year ago. Sales rose to $10.6 billion from $9.1 billion. Dell's numbers were consistent with Wall Street expectations.
The company has turned heads in the last few weeks by introducing several new products for consumers, including a digital music player and a flat-panel television. Mr. Dell declined to discuss early sales figures for those products, saying it was too soon, but said Dell has sold 1 million printers since introducing its own brand in March.
Sales to corporations are more important to Dell's bottom line than sales to consumers. As corporate technology spending slipped in the last few years, Dell grew by winning accounts away from its competitors.
The slide in corporate spending on personal computers appears to be over, Dell executives said Thursday. "We've now had five consecutive quarters of industry growth," chief financial officer Jim Schneider said.
That doesn't mean that corporate spending will explode in the fourth quarter.
Companies don't traditionally spend leftover budget money on PCs unless they really need them, Mr. Dell said.
Corporations will probably continue to exercise caution until the pace of economic recovery becomes more clear, executives said.
"We see a bit more light at the end of the tunnel in other segments, such as consumers and small and medium-size businesses," Mr. Rollins said.
Dell expects fourth-quarter earnings of 28 cents per share on sales of $11.5 billion.
Dell shares fell 3 cents to $35.64 on Thursday. The company unexpectedly released its earnings nearly an hour before the close of trading because some figures were accidentally posted on the company's Web site.
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