Dell buoyant in Q3

Dell has reported another record quarter, buoyed by prices of components such as RAM and LCD screens falling, and hinted future expansion in Europe could come, beyond its successful facility in Limerick, Ireland.

The Round Rock, Texas-based PC maker on Thursday posted double-digit third-quarter revenue and profit increases thanks to higher gross margins and unit shipments that jumped 22 per cent since the same period a year ago. Overall, the company sold about eight million desktops, notebooks and servers during the quarter.

Dell posted an $846m net profit on revenue of $12.5bn for the fiscal quarter, which ended on 29 October, matching Wall Street analysts' expectations, according to Thompson FirstCall.

Paul Bell, Dell EMEA president, said: "The component [price drops] are partly a good thing but partly the result of a bad thing. They are the result of a little softer growth in the industry as well as more suppliers coming online."

While the company is keen to make money every time it grows its revenues, it is also still looking to gain market share in its key PC and servers markets, passing on reductions to buyers rather than maximising margins - though margins did go up slightly.

With Dell announcing its third North American plant in North Carolina recently, speculation has turned to where else it might build operations in Europe and Asia.

"Limerick is more and more productive," Dell's Bell said, adding that means it is likely to be at least two years before any new ground is broken.

However, he said that - as with a North Carolina facility serving the north-east of the US - setting up somewhere else in Europe would bring products physically closer to customers, which would have advantages.

Although the falling component prices should also benefit Dell rivals such as HP, Dell has yet to see any broad-based moves by competitors to lower prices, CEO Kevin Rollins said in a conference call.

"We have not seen a fundamental change at all in pricing behaviour by our competitors," he said.

Dell, which is already focusing on special offers and discounts for the end of the year - it's currently offering 25 per cent price reductions on some desktops and notebooks - expects to deliver steady gains during its fourth quarter.

Business buying has also been stronger, a trend Dell expects will continue, Rollins said.

Dell also reaffirmed analysts' expectations for its fourth quarter, which ends in January. The company forecast a profit of 36 cents a share and revenue of $13.5bn for the quarter. If Dell meets or exceeds those goals, it will pull in nearly $50bn in revenue during its fiscal 2005, allowing it to reach its goal of $60bn in annual revenue a year early, executives said.

John G Spooner writes for CNET News.com.