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Dell beats the street, again
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February 18, 1998: 7:05 p.m. ET
Computer maker reports solid results, sets 2-for-1 stock split
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NEW YORK (CNNfn) - Buoyed by strong computer sales, Dell Computer Corp. Wednesday reported a 52 percent surge in fourth quarter profits and announced a 2-for-1 stock split.
The Round Rock, Texas-based provider of made-to-order personal computers earned $285 million or 81 cents a diluted share in the fourth quarter ended Feb. 1, up 52 percent from the $188 million or 50 cents a share a year ago. Revenues surged 55 percent to $3.7 billion.
Those numbers handily beat analysts' expectations of 76 cents a share.
Dell said North American revenues soared 51 percent in the quarter to $2.5 billion and Asia-Pacific revenues jumped 79 percent to $240 million.
Industry analysts said the stock split, the fifth in the last six years, is a sign that Dell believes its business is going to be robust.
"They want individuals to be able to buy their shares at a lower price--as of today's close of around 112, it'll be splitting back to $56 where the average investor could now buy dell stock-that's the kind of retail shareholders they would like," Matthew Russo, computer analyst at Sands Brothers & Co.
"Dell is growing by far the fastest on a revenue basis than the other competitors in the computer hardware space -- Dell is growing over 50 percent a year where the others are growing at less than 30 percent on a revenue basis," he added.
For the full year, revenues increased 59 percent to $12.3 billion, while earnings per share for the year were $2.56, compared with $1.32 last year, a 94-percent increase.
Dell cites customer focus
"The key to our performance in the fourth quarter was focus," said Michael Dell, chairman and chief executive officer. "By remaining focused, we have helped our customers benefit from the superior performance, service and value that our unique direct model delivers."
"We see a healthy industry in the year ahead," said Dell. "Major demand drivers, including processor transitions and component cost reductions, remain solid, and consolidation is separating top companies such as Dell from the rest of the field."
Prior to the release of its results Dell (DELL) shares closed at 113-3/16, up 1-7/8. Shares had climbed to 114-7/8 in after-hours trading.
Dell said it is expecting sales to grow almost 20 percent in 1998. It is also planning to expand its Web site, which currently generates $4 million in sales a day, to accommodate a higher traffic load.
Dell expanding enterprise unit
The company also said it is expanding its enterprise systems business unit to include a dedicated workstation business unit. Dell, which markets workstations that run on Microsoft Corp.'s Windows NT operating system, is now the No. 3 supplier of such systems, according to market research firm International Data Corp.
Dell also plans to target more customers in the Asia-Pacific, Latin America and European regions.
The company expects 1998 to be the year many of its customers move to systems based on Intel Corp.'s Pentium II processor.
"The latest move to the Intel Pentium II processor to run modern business and consumer applications and the latest Microsoft operating systems, including Windows NT and Windows 98, is already well underway. Dell is well positioned for this transition," Dell said.
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Dell
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