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Dell's Dell talks growth
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February 19, 1998: 3:56 p.m. ET
Computer maker's chairman sees further expansion, but no acquisitions
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NEW YORK (CNNfn) - Shares of Dell Computer Corp. rocketed to a record high Thursday, one day after the Round Rock, Texas-based provider of personal computers reported a surge in fourth-quarter earnings as well as a 2-for-1 stock split.
On Wednesday, Dell Computer reported that earnings in its fiscal fourth quarter, ended Feb. 1, increased 52 percent to $285 million, or 81 cents a diluted share, from $188 million, or 50 cents a share, a year ago. Revenue surged 55 percent to $3.7 billion.
Dell shares soared 9-5/8, or 8.5 percent, to 122-13/16.
Dell Computer Chairman and Chief Executive Officer Michael Dell said Thursday he expects to sustain the company's current growth rate above market levels, though he doesn't plan on making any acquisitions.
"The 55 percent growth is very consistent with what we've seen over the last 14 years," Dell told CNNfn's "Before Hours". "We think we have a considerable opportunity going forward to grow faster than the market."
Dell said the financial crisis in Asia is unlikely to effect the company's strong overseas sales. "Direct is taking hold across Asia," Dell said, referring to the company's concept of manufacturing and delivering made-to-order computers without a middleman. Because Dell Computer's presence in many overseas markets is still fairly small, the company sees a lot off room for growth, he added.
The company also expects a massive replacement market to drive future sales, as the more savvy PC customers upgrade their machines.
"A very small percentage … of the market has a Pentium II installed, yet to run today's modern applications and to take full advantage of the Internet, you really need a Pentium II," Dell said. That, he believes, will drive droves of second- and third-time buyers to Dell computers.
The CEO confirmed the company is focusing to expand its share of the workstation, server and laptop market, but he ruled out acquisitions.
"We have found through internal growth and a disciplined focus on our direct model and by partnering with the world's leading services companies, we can essentially see this growth in an internal fashion," Dell said.
Matthew Russo, computer analyst at Sands Brothers & Co., is bullish on Dell Computer and believes it continues to be a solid, long-term bet.
"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 while the others are growing at less than 30 percent on a revenue basis," he said.
By splitting its stock for the fifth time in six years, Russo said Dell Computer is telling shareholders it sees a bright future ahead.
"They want individuals to be able to buy their shares at a lower price. It will be splitting back to $56 where the average investor can now buy Dell stock. That's the kind of retail shareholders they would like," he said.
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Dell Computers
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