Dell's Profits Rise 24 Percent
Posted on: Thursday, 14 August 2003, 06:00 CDT
Aug. 15--Dell Chairman and Chief Executive Michael Dell called his company's second-quarter earnings report "quite respectable" Thursday, but stopped short of saying it was a sign of an economic recovery.
"We've grown significantly during this period of difficulty," he said, referring to the economic slowdown of the past couple of years. "There is increased optimism among CEOs at large companies, but I don't want to characterize that too strongly."
Dell reported a 24 percent jump in profit over a year ago, market-share gains in every category around the globe and 27 percent growth in product shipments, more than four times the growth of the rest of the industry.
The company earned $621million, or 24 cents a share, in the quarter that ended Aug. 1, compared with $501million, or 19 cents a share, for the same quarter last year.
Revenue was $9.8billion, up 16 percent from $8.5billion reported the same time last year.
Speaking on a conference call with reporters, Dell noted that the second quarter tends to be the low point of the year for technology companies.
Last month, industry analysts said PC sales were up considerably over last year but Dell cautioned about reading too much into that.
"You can only go up when you're comparing with the decline in previous years," he said.
Dell showed strength in areas outside its core PC business. Increased sales in servers and business services, combined with an overall decline in the costs of components, helped pave the way to a good quarter, company executives said. Contrary to what other companies are saying, corporate customers are starting to spend on technology again, Dell said.
The companies that are spending, he said, are spending "a tremendous amount of money on IT."
"They are upgrading PCs installed prior to year 2000. But that's happening quarter by quarter, company by company," Dell said. "The upgrade cycle is occurring."
Server shipments were up 27 percent year-over-year -- much of that coming from overseas. In the Pacific Rim and Japan, for example, shipments of Dell's PowerEdge servers were up 40 percent, more than double the rate for other companies in the region, the company said.
Dell shares rose 8 cents to close at $31.39 Thursday.
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(c) 2003, San Jose Mercury News, Calif. Distributed by Knight Ridder/Tribune Business News.
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