Dell Quarterly Profit Up 62%; Company Becomes No. 1 Seller

Dell Computer Corp., the largest direct seller of computers, said Tuesday that its quarterly profit rose 62%, as it dethroned Compaq Computer Corp. as the nation’s No. 1 seller of desktop machines.

The financial results exceeded Wall Street expectations and for the first time gave the fast-growing computer company bragging rights held by archrival Compaq.

Dell cited strong demand across its range of business computers. Dell, which started out as a mail-order company, deploys a direct-sales force to largely cut out the retailers, specialty stores and distributors who can drive up prices.

The company said it is selling about $6 million a day in computers from its Web site.

Dell said it earned $346 million, or 50 cents a share on a diluted basis, in the three months ended Aug. 2. That was up from a profit of $214 million, or 29 cents a diluted share, in the year-ago quarter.

Revenue grew 54% to $4.33 billion from $2.81 billion.

Analysts surveyed by First Call Corp. had expected Dell to report a profit of 46 cents a share. Dell shares fell $1 to $109.56 on Nasdaq in regular trading, but then soared to $114 in after-hours trading, following the earnings report.

The company managed to weather the economic slump in Asia despite an overall computer industry decline of 9% in the region, which has hurt profits at rivals such as IBM, Compaq and Hewlett-Packard Co.