|
Dell posts solid 3Q
|
 |
November 11, 1999: 7:09 p.m. ET
Company meets expectations, despite rise in memory prices
|
NEW YORK (CNNfn) - Dell Computer Corp. Thursday reported third-quarter profits that were in line with Wall Street's expectations, as increased demand for its workstation, server and storage products helped the company post a sharp rise in revenue.
Excluding one-time acquisition charges, Dell (DELL), the world leader in direct computer sales, netted $483 million, or 18 cents per share during its fiscal third quarter, which ended Oct. 31. That was up from 14 cents per share last year.
Revenue came in at $6.78 billion, an increase of 41 percent from $4.8 billion during last year's fiscal third quarter.
The strong results were in spite of a higher-than-expected increase in prices for the memory chips Dell uses in its computer products, which the company warned Wall Street about last month.
Net income as a percent of revenue fell to 7.1 percent during the quarter, down from 8 percent last year, primarily because of the higher memory costs, Dell said.
Sales of enterprise equipment were particularly strong during the quarter, with workstations, servers and storage products accounting for 17 percent of the total net revenue, Dell said.
At the end of New York trading, before the announcement, Dell closed up 2 at 43-7/16. In after-hours trading Dell was quoted at 44-7/8.
Dell said its long-term opportunities in the storage segment were significantly enhanced by its acquisition of ConvergeNet, a data-storage technology outfit that Dell bought during the quarter.
In total, Dell's worldwide product shipments were up 59 percent from last year, with shipments rising 69 percent in Asia-Pacific and Japan, 45 percent in the Americas and 22 percent in Europe, the company said.
Sales of Dell notebook computers were up 55 percent during the quarter, although they were dampened somewhat by a shortage of flat-panel displays, Michael Dell, the company's founder and chairman told analysts during a conference call Thursday evening.
However, the outlook for those components moving into the fiscal fourth quarter, which ends in January, is much better than it was during the third quarter, according to Dell.
"We are seeing a substantial improvement in the availability of flat-panel screens (from) two months ago," Dell said.
Part of that is due to the $200 million investment Dell made in Samsung Electronics Co., Dell said.
The company last month bought $200 million worth of Samsung bonds convertible to stock in October 2000 in return for a guarantee of a supply of $8.5 billion worth of thin-film transistor liquid crystal displays over the next five years.
Dell also is not expecting any major impact on its fourth-quarter results because of customer concerns about the Y2K problem, which could render some computer systems unable to deal with the date change from 1999 to 2000, Dell said.
"Our outlook has not changed at all," he said.
While not making any specific revenue forecasts, Dell indicated that the company remains in a good growth position and said the market for its products remains robust.
"We continue to believe that overall industry demand remains healthy," he said.
The company also will sharpen its focus on the Internet, which by the end of the most recent quarter represented about 43 percent of its total sales, nearly $35 million per day, Dell said.
"All of the efforts we have made with the Internet have helped pave the way for Dell's growth," he said. "Our Internet sales represent only a portion of how we are and will be using the Web's speed and efficiency to the benefit of customers, and in turn, to the company."
Year-to-date, Dell has posted $18.4 billion in revenue, up from 13 billion during the first three quarters of fiscal 1998. The company's net income so far this year totals $1.23 billion, or 45 cents per share, compared with $1.03 billion, or 37 cents per share during the first three quarters of fiscal 1998.
Gross margins for the first three quarters of fiscal 1999 were 21.2 percent, down from 22.5 percent last year.
However, Dell said that the component pricing difficulties the company has faced this year appear to be subsiding, which likely will result in improved margins during the current quarter. 
|
|
|
Dell
|
Note: Pages will open in a new browser window
External sites are not endorsed by CNNmoney
|
|
|
|
 |
|
