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Dell 3Q profits rise 55%
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November 12, 1998: 6:08 p.m. ET
Computer maker beats forecasts by a penny; reports growth in all regions
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NEW YORK (CNNfn) - Dell Computer Corp. Thursday logged a 55-percent hike in third-quarter earnings, putting its profits a penny ahead of Wall Street estimates.
The Round Rock, Texas, computer maker attributed its strong showing to solid growth in all customer segments and world market regions.
Dell reported a profit of $384 million, or 28 cents a share, on $4.8 billion in revenue, a 51-percent increase over last-year's sales. Analysts expected the company to earn 27 cents a share in the quarter, according to First Call estimates.
The direct-sales leader posted earnings of $248 million, or 17 cents a share -- adjusted for a stock split -- on $3.2 billion in revenue in the year-ago quarter.
"Our business continued to grow profitably in all customer segments and regions around the world," said Chairman and Chief Executive Officer Michael Dell.
Dell said it managed to post 49-percent revenue growth in the Asia-Pacific region, compared with 2 percent for the rest of the industry.
Dell, the No. 2 computer maker, has been steadily gaining on market leader Compaq Computer Corp. (CPQ). Its third-quarter worldwide market share climbed to 14.1 percent, a 65-percent increase from last year.
However, the company faces increased competition in the direct-sales market from Compaq and Gateway Inc. (GTW).
Nonetheless, Dell said market conditions should foster further growth down the road.
"As we come to the end of the calendar year, industry conditions remain healthy," Dell said. "Processor and operating system transitions and component cost declines continue to position our industry for strong customer demand."
Dell (DELL) shares slipped 2-3/4 to close at 69-3/16 before falling to 65 in after-hours trading as investors expressed anxiety over pricing issues.
Indeed, Dell reported third-quarter average revenue per unit of $2,400, which was flat with second-quarter figures and nearly 8 percent below last year's average of $2,600 per unit.
Also, Dell's gross margins remained unchanged versus the year-ago quarter at 22.5 percent.
Dell has, however, continued to trim its inventory supply. The company said it had a 7-day supply in the third quarter, down from 8 days in the second quarter and 11 days in the year-ago period.
The company also said it had surpassed $10 million a day in worldwide online sales, triple its year-ago figure. Dell attributed the surge to strong sales to corporate and government customers. 
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