Dell Says Earnings Fell, Market Share Rose
No. 1 personal computer maker Dell Computer Corp. on Thursday posted slightly lower earnings for its fiscal fourth quarter in a weak corporate market but made more gains against its rivals in the consumer business.
Dell, which has led an aggressive price war that helped it win market share from rivals such as Compaq Computer Corp., also said it expects to outperform the industry in its current quarter.
Dell said it expects industrywide shipments to drop 10% in the current quarter from the fourth quarter but sees its own volumes falling by 3% to 5%. Shares of Dell rose to $27.06 in after-hours trading, up from its close of $26.81 on Nasdaq. The results were released after the markets closed.
“They beat the numbers on the revenue, and earnings came in line with the revised upward guidance,” said Alan Loewenstein, portfolio co-manager of the John Hancock Technology Fund. “Dell is taking market share and, yes, Dell is winning versus Compaq and Hewlett-Packard and Gateway.”
Earnings for the quarter ended Feb. 1 declined 10% to $456 million, or 17 cents a share, from $508 million, or 18 cents, a year ago, excluding charges. Revenue declined 7% to $8.06 billion even as consumer demand for Dell PCs grew more than expected.
Dell had raised its fourth-quarter guidance last month to earnings of 17 cents from 16 cents, on revenue of $8 billion.
For the first quarter, Dell said it expects earnings to meet the Wall Street consensus of 16 cents and revenue to meet or modestly beat the estimates of $7.6 billion.
Dell’s outlook is in line with what other technology companies have been saying about the first quarter. Hewlett-Packard Co., for instance, said Wednesday that it expects revenue to fall modestly this quarter.
The PC industry had a tough year in 2001, with demand among consumers and corporations in a slump that worsened as the economic downturn took hold. During that time, Dell led an aggressive price war that helped it win substantial market share and unseat Compaq as the top PC company.
Consumer demand in the fourth quarter was stronger than many PC makers expected, however, causing Dell rivals to surpass earnings and revenue expectations.
Other technology sector earnings, excluding one-time items unless noted:
* Nvidia Corp. said its fiscal fourth-quarter earnings soared 143% to $75.5 million, or 43 cents a share, beating analysts’ expectations of 31 to 36 cents. Revenue climbed 129% to $500 million. But the company’s disclosure of an internal investigation after a Securities and Exchange Commission inquiry sent its shares down sharply in after-hours trade to $57.30 from a Nasdaq close of $62.16.
Analysts, however, dismissed concerns about the probe, and focused on Nvidia’s results, which topped even the most optimistic forecasts.
The Santa Clara, Calif.-based company said earnings soared 143% to $75.5 million, or 43 cents a share. Analysts on average were expecting 34 cents, with a range of 31 to 36 cents. Revenue climbed 129% to $500 million.
Nvidia, a maker of computer graphics processors and software, said it was conducting an internal review of the recording of certain reserves and the timing of certain expense records in its 2000 fourth quarter and the first three quarters of fiscal 2001.
The review was spurred by an inquiry from the SEC and is related to the SEC’s previously announced investigation of alleged insider trading by some Nvidia engineers.* Ingram Micro Inc. said net income in its fiscal fourth quarter tumbled to $5.7 million, or 4 cents a share, from $57.9 million, or 39 cents, as businesses and consumers bought fewer personal computers. The computer products distributor said profit was $14.4 million, or 10 cents a share, 2 cents better than analysts’ forecasts. Sales fell 24% to $6.14 billion. Ingram also warned that sales and profit will miss Wall Street estimates for the current quarter.
