Dell's Q4 results put a smile on Rollins' face

Dell got its financial performance back on track during its fourth quarter, as corporate products such as servers and storage devices boosted the company's performance beyond analyst expectations.

Revenue for the quarter ended 3 February, was $15.2bn, up 13 per cent from revenue of $13.5bn last year. Analysts polled by Thomson First Call had expected the company to record $14.8bn in revenue.

Net income was $1bn, up 52 per cent from $667m last year. Profits per share of 43 cents beat analyst expectations of 41 cents per share.

Kevin Rollins, Dell's chief executive officer, said on a conference call following the profits announcement: "We now have excellent balance, and the focus is on our enterprise products."

Dell singled out a 21 per cent increase in worldwide sales to its corporate customers as one of the main forces behind its quarter. Its consumer business, which had dragged down the company in its second and third quarters, was helped in the fourth quarter by a 20 per cent increase in shipments of its high-end XPS desktops and laptops.

The company was also helped by an extra week in this year's fourth quarter as compared with the previous year's quarter, Rollins said. The 14-week quarter added about two per cent to three per cent of extra revenue growth to the total, he said.

Revenue for the full year was $55.9bn, up from $49.2bn in 2004. Net income was $3.6bn, a 17 per cent increase from the prior year. Laptops continued to provide the majority of Dell and the overall PC industry's growth, with a 47 per cent jump in shipments and a 22 per cent jump in revenue from mobility products, which includes laptops, PDAs and Dell's music players.

Dell's storage business was its fastest-growing segment during the fourth quarter, with 41 per cent growth in revenue. Services revenue grew 26 per cent. Over the last year, Dell has been trying to change its perception as a low-cost PC manufacturer to that of an enterprise IT vendor that can offer everything from laptops to storage-area networks. Services and storage still represent only 12 per cent of the company's overall revenue but they are gaining ground on its other businesses.

Despite the positive results, analysts repeatedly questioned Dell on its outlook for the first quarter, which fell below previous expectations. The company said it expects first-quarter revenue to be between $14.2bn and $14.6bn, down about five per cent compared with the fourth quarter. Analysts had predicted first-quarter revenue of $14.7bn prior to Thursday.

Rollins said: "The first quarter is always the toughest quarter for us." But Dell is still growing faster than the industry and demand for its products remains strong, he said.

Dell's business outside of the US grew strongly, with shipments to Europe, the Middle East and Africa up 25 per cent and shipments to Asia up 27 per cent. In the closely watched Chinese market, Dell's shipments grew 28 per cent and profits improved, the company said.

Tom Krazit writes for CNET News.com