Dell Computer Rises From Red, Tops Expectations

Dell Computer Corp. on Tuesday reported it was earning money again, after falling into the red for the first time earlier this year.

The company’s performance in its third fiscal quarter exceeded Wall Street’s expectations. Dell stock on Nasdaq jumped $3 Tuesday to close at $27.125.

“The turnaround was faster than anyone expected and the margin improvement better than anyone expected,” said Marianne Wolk, analyst at Prudential Securities.

However, Chairman Michael Dell said the nation’s fifth-largest PC company would not meet its $3-billion sales target for the year.

Dell said it earned $12 million, or 26 cents per share, in the three months ended Oct. 31. It earned $29.6 million, or 72 cents per share, in the same period a year ago.

Revenue was $757.3 million, up 33% from $570 million a year ago.

The Austin, Tex.-based company lost $75.7 million in its second quarter after taking a $71-million restructuring charge.

The company had failed to keep pace with changes in notebook computer design and left the market in August. In addition, its internal systems and processes couldn’t keep up with its growth, which until this year was doubling annually.

The growth slowed to 84% in the first quarter and 50% in the second.

The charge paid for reshaping its international operation and internal processes such as parts ordering and marketing.

Dell eliminated about 200 jobs during the quarter, chiefly in Europe, and closed smaller offices in Finland and Italy.

The company will re-enter the notebook computer business during the first half of next year. But it will take a year or so to reach selling levels comparable to the product mix of rivals like International Business Machines Corp. and Compaq Computer Corp., Dell said.

For the first nine months of the year, Dell lost $53.5 million, or $1.48 per share, on sales of $2.1 billion. The company earned $70.4 million, or $1.81 per share, on sales of $1.4 billion in the same period a year ago.