Dell's Q3 results set company records - again

Dell continued to outpace the rest of the IT industry in the company's third quarter with sizzling growth in shipments, revenue, and net income adding up to the best quarter yet for the hardware vendor, the company said Thursday.

Revenue was US$12.5 billion for the period ending Oct. 29, an increase of 18 percent from last year's third quarter revenue of US$10.6 billion. Net income was US$846 million, up 25 percent from US$677 million in the previous year's third quarter.

Earnings per share were US$0.33, a 27 percent increase from last year. Both the revenue and earnings per share figures matched estimates of analysts polled by Thomson First Call.

Dell posted strong increases in shipments across the breadth of its products. The company has set internal records for quarterly revenue in three of the last four quarters. The only exception was the traditionally slow first quarter of 2004, which nonetheless was a Dell record for first-quarter revenue.

PC market watchers such as IDC and Gartner Inc. have warned that consumer spending on PCs is headed for a slowdown, but Dell doesn't expect any impact on its business, President and Chief Executive Officer Kevin Rollins said. The company derives the majority of its revenue from businesses, which increased their spending on Dell products by 25 percent in the quarter, he said.

The Round Rock, Texas, company expects more of the same for the fourth quarter. Revenue should be about US$13.5 billion and earnings per share should be US$0.36, Dell said.

Worldwide shipment growth in the quarter was 22 percent, propelled by a 35 percent increase in notebook shipments, Dell said.

A decline in component prices for flat-screen panels helped drive the growth in notebook shipments, Rollins said. Component prices fell in several categories, but the availability of cheaper displays was great news for the notebook business, he said.

The company expects to sell five million printers this year, making its printer business the most successful startup business Dell has ever built, Rollins said.

Dell continues to grow strongly outside of the U.S., where it is chasing Hewlett-Packard (HP) in PCs and servers. Overall shipments to Europe, the Middle East, and Africa increased 31 percent in the quarter, and shipments to Asia-Pacific and Japan were up 25 percent.

HP ships the most servers worldwide, but Dell believes it narrowed that lead by two percent in the third quarter, it said. Dell server shipments were up 19 percent compared to last year even though the company struggled in the early part of the quarter with some product transitions, Rollins said.

Rollins reiterated comments made earlier this week that while Dell is impressed with Advanced Micro Devices' Opteron server processor, it has no specific plans to break its exclusive relationship with Intel at this time.

In the third quater, the company's headcount increased by 3,000 employees from the second quarter of this year and by almost 10,000 employees compared to the same period last year. Dell is bringing more call center employees in-house, as opposed to using third-party companies to handle support calls, Rollins said.

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Tom Krazit

IDG News Service
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