To print: Click here or Select File and then Print from your browser's menu

This story was printed from silicon.com, located at http://www.silicon.com/

Story URL: http://hardware.silicon.com/desktops/0,39024645,39120680,00.htm

Asia-Pacific sales boost helps Dell meet targets
Dells sell well to meet expectations

By Matt Hines

Published: Friday 14 May 2004

Dell reported on Thursday that its first-quarter earnings met analyst estimates largely because of improved international sales. The company's first-quarter revenue was up 21 per cent.

The PC maker reported a net income of $731m, or 28 cents per share, in the quarter ended 30 April. That figure was up from $598 million, or 23 cents per share, a year earlier, representing an increase of 22 per cent. Revenue increased to $11.5bn, compared with $9.5bbn a year ago, a 21 per cent gain.

The first-quarter report narrowly beat analysts' average revenue estimate of $11.4bn, and met projected net income of 28 cents per share, as published by Thompson First Call.

Dell executives pointed out that the company delivered its seventh straight quarter of 20 per cent or greater year-over-year growth. Kevin Rollins, the company's current president and future chief executive, said Dell hopes to mirror that performance in the future.

"Our strategy proved itself in Q1 just as it has over the past several years," Rollins said. "As we progress through Q2, we want to maintain the flexibility to react to changing market dynamics while still delivering on our financial commitments."

Rollins said that pricing hardware components will likely be challenging in the near future. He added that Dell will focus on product lines and regions where higher profit margins are more readily available, in order to offset the issue.

Dell raised its first-quarter earnings estimate last month, attributing the improved financial outlook to growth in international markets. Over the past year, Dell has steadily increased its PC shipments and market share, while garnering more revenue and higher profits. The company ended its fiscal 2004 in January with a net income of $2.6bn, or $1.01 per share, on revenue of $41bn, moving it closer to its stated goal of reaching $60bn in annual revenue.

The company reported first-quarter operating income of $966m, up 19 per cent from one year ago, despite higher-than-expected costs for random-access memory.

The impressive first-quarter performance was carried by strong product shipment volumes, which rose 25 per cent overall from the same quarter a year ago. Dell said its fastest growth came from the Asia-Pacific/Japan region, where it recorded a 38 pe rcent quarterly increase. In other strong performances, the computer maker's product shipments to Europe, the Middle East and Africa jumped by some 37 per cent.

The company said product shipments in the US rose 18 per cent during the period, pushed by improved demand from small and medium-size businesses and consumers. The company's Americas business outside the US was up 24 per cent compared with the first quarter of 2004, including a 26 per cent increase in Canada.

For the fiscal second quarter, Dell said it expects growth in product shipments of 24 per cent compared with last year. The company expects to post revenue of roughly $11.7bn, up 20 per cent from a year ago, and per-share earnings of 29 cents, a 21 per cent year-over-year increase.

The hardware specialist also reported record market share growth for the quarter in its printer business. Specifically, Dell grew its initial US market share in printers faster than in any new product category in its history. In just one year, Dell garnered a share of more than 10 per cent in inkjet printers, and in the upper teens in all-in-one printers. The company confirmed that it plans to introduce new printer models sometime in the next few weeks.

"We've been able to provide tremendous value to the market by providing ink-and-laser solutions, which are at least 20 per cent cheaper than our competition," Rollins said.

The executive highlighted Dell's plans to expand its printer business internationally. It has launched its products in Europe and Australia over the past two quarters and has designs on delivering printers to the Japan and China markets before the end of the year.

Dell reported 24 per cent growth in its server shipments, with revenue from its EMC-oriented systems growing by 25 per cent compared with the first quarter of last year.

Matt Hines writes for CNET News.com