Dell Posts Big Earnings Gains

Strong sales in Europe and Asia pushed Dell Computer Corp., the world’s No. 1 manufacturer of personal computers, to robust profit for its fiscal fourth quarter and full year amid a challenging economic environment that has left other PC makers struggling.

Net income for the quarter, which ended Jan. 31, was $603 million, or 23 cents a share, on revenue of $9.74 billion. That was up 32% from $456 million, or 17 cents a share, in the fourth quarter a year earlier, when sales were $8.06 billion.

“Customer preference drove a 25% increase in our unit shipments,” Chief Financial Officer Jim Schneider said in a conference call with journalists. “The rest of the industry grew less than 1%.”

Schneider noted that increases in product shipments, revenue and operating profit in the fourth quarter were driven in part by overseas sales, which rose 19% over those of the previous fourth quarter. Sales to China jumped 72%.

For the full fiscal year, the Round Rock, Texas-based manufacturer earned $2.1 billion, or 80 cents a share, on revenue of $35.4 billion. That was up 70% from fiscal 2002, when Dell earned $1.2 billion, or 46 cents a share, on sales of $31.2 billion.

For the current quarter, Schneider said, Dell is likely to post revenue of $9.5 billion and a profit of 23 cents a share despite concerns over a weak economy and a possible war with Iraq.

“We don’t expect near-time improvement in economic or industry conditions,” Schneider said. “However, soft demand is not an excuse for poor results.”

Company founder and Chief Executive Michael Dell said he had not noticed any effect from war fears.

“In my travels around talking to customers,” he said, “I haven’t heard a lot of customers saying they’re going to or not going to do something specifically related to this.”

Dell shares rose 31 cents to close at $23.25 in Nasdaq trading Thursday before the results were announced. They jumped further in after-hours trading, settling at about $24.

The company sells most of its products over the Internet and by telephone, allowing it to keep overhead costs low and deliver custom-designed computers in a matter of days.

CEO Dell said sales of the Axiom hand-held computer, which the company introduced in November, were stronger than expected.

But he said the company’s most dramatic growth was not in PCs but in servers, data storage, systems and services for large corporate customers.

“These are really the more significant engines of Dell’s growth,” he said, “and I wouldn’t want you to get distracted by small, shiny objects.”