Dell Posts Slightly Lower Earnings
Dell Computer Corp. said Thursday that first-quarter earnings fell on low personal computer prices even as the company increased revenue and topped Wall Street expectations.
Dell, which has used its direct business model to keep PC prices low, guided earnings and revenue forecasts higher for the second quarter and said it expects to continue to gain market share, although it expects industry shipments to decline by about 5%.
Texas-based Dell, which lost its spot as the No.1 personal computer maker after Hewlett-Packard Co. bought Compaq Computer Corp. earlier this month, said net income fell to $457 million, or 17 cents a share, compared with $462 million, or 17 cents, a year earlier.
Revenue rose slightly to $8.07 billion from $8.03 billion.
Analysts’ average estimate for earnings was 16 cents a share on revenue of $7.8 billion, according to Thomson Financial/First Call.
Dell also committed to keeping costs low, saying it will reduce costs by more than $1 billion in fiscal 2003. It will cut costs in product design, manufacturing and distribution, operating expenses and warranty costs, the company said.
It said it expects second-quarter earnings of 18 cents a share and that revenue will rise 8% from the year-earlier quarter to $8.2 billion.
Analysts estimate second-quarter earnings of 17 cents a share on revenue of $8.02 billion.
Dell is known for its direct business model, which last year enabled it to cut prices sharply and gain market share.
In addition to PCs, Dell sells computer servers, networking switches and as of this week, digital projectors.
At the beginning of 2002, the company began reselling data storage machines made by EMC Corp. and is considering taking on production of some less pricey storage systems.
Michael Dell, the company’s founder and chief executive, said Dell benefited during the quarter from the confusion surrounding the merger of Hewlett-Packard and Compaq as some customers, uncertain about which products would be available after the merger, switched to Dell.
Dell shares rose slightly to $27.15, up 15 cents on Nasdaq. The results were announced after the markets closed.
