Dell meets expectations

Dell Computer Corp. reported earnings Thursday for its fourth quarter that were roughly in-line with figures from last year, as the company benefitted from an uptick in consumer PC sales.

Dell reported net income of US$465 million and earnings of US$0.17 per share for its fourth fiscal quarter, meeting expectations of analysts polled by Thomson Financial/First Call for the quarter ending Feb. 1. Revenue came in at $8.1 billion.

These figures compare with net income of $434 million and earnings of $0.16 per share in the same quarter a year ago. Excluding a charge related to layoffs and facility expenses, net income in last year's fourth quarter was $508 million with $0.18 in earnings per share.

For its full fiscal year, Dell churned out $1.78 billion in net income, excluding a $742 million second-quarter charge related to job reductions, consolidation of facilities and impairment of assets. That compares with net income of $2.31 billion in 2001, excluding a $105 million charge related to job reductions and consolidation of facilities and a $59 million after-tax charge related to the cumulative effect of an accounting change.

Dell raised its expectations in January, citing the uptick in PC sales as a reason for the more optimistic forecast.

The rise in spending, however, may not carry over to the next quarter. A drop in consumer purchases coupled with soft business demand could lead to a 10 percent decline in overall industry shipments, according to the statement.

Still, Michael Dell, chairman and chief executive officer at Dell, said he thought the economic downturn hit bottom in last year's third quarter and that an overall improvement in the economy was on the way.

"We are stabilizing to slightly strengthening," Dell said, during a conference call with reporters. "I think it will be a fairly gradual and gentle recovery."

A rise in DRAM (dynamic RAM) and LCD (liquid crystal display) component prices as a result of higher demand also showed that the market may be making a recovery, Dell said.

Dell fared well outside North America, showing a 50 percent surge in server shipments in South America and Central America and a 23 percent jump in Japan compared to 2001's fourth quarter.

Dell's worldwide server shipments increased 27 percent, according to the statement.

The German market also provided a bright spot for Dell with a 50 percent rise in workstation shipments and a 46 percent surge for notebooks.

"Business is going very well there and continues to be a focus for us," Dell said.

Corporate customers make up the bulk of Dell's customer base in Germany.

Dell was the sole company to post a year-on-year increase in PC shipments both worldwide and in the U.S. according to figures released last month by market research group International Data Corp. (IDC). Dell now has a 27.5 percent market share in the U.S. and a 14.2 percent market share worldwide in unit shipments, putting it at the top of the two markets.

The overall PC market declined in both markets, with unit shipments dropping 10.1 percent in the U.S., and 6.7 percent worldwide, according to IDC.

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Ashlee Vance

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