Dell Profit Jumps 24%
Dell Inc., the world’s largest maker of personal computers, said Thursday that strong sales of server computers and data-storage products boosted fourth-quarter earnings 24%.
Dell’s profit in the three months ended Jan. 30 rose to $749 million, or 29 cents a share, from $603 million, or 23 cents, a year earlier. Revenue in the quarter jumped 18.6% to $11.5 billion.
“It was a typically classic Dell quarter -- good, solid growth, continued gains in market share, and they continue to see very good success in the enterprise space,” said Brent Bracelin, a hardware analyst with Pacific Crest Securities.
Revenue for the current quarter is expected to follow seasonal patterns and come in at $11.2 billion, 17% higher than a year earlier, Chief Financial Officer Jim Schneider said in a conference call. Earnings per share should be 28 cents, up 22%, he said.
For the full 2004 fiscal year, Dell’s profit was $2.6 billion, or $1.01 a share, up from $2.1 billion, or 80 cents, in fiscal 2003. Revenue grew to $41.4 billion from $35.4 billion a year earlier as Dell continued to push toward its goal of $60 billion annual revenue within a few years.
Both the quarterly and full-year profit and revenue figures were all-time highs for the Round Rock, Texas, company.
Server shipments increased 40% and storage sales grew 47% in the quarter to help drive Dell to its record performance. Strength in those markets is a sign that corporate spending is returning, Schneider said.
“We’re very encouraged because we saw a pickup in our unit volume and the number of opportunities we’ve had to bid in the corporate section,” he said. Dell’s larger corporate and global accounts “had double-digit year-over-year growth, the strongest in several quarters.”
Chief Executive Michael Dell said corporate spending, which is beginning to come out of a three-year slump, was “relatively healthy.”
“We’re seeing increased demand from customers to refresh their older installed base of product, so we’re feeling good about how we’re positioned for this year,” Dell said during the call.
Dell increased its share of the global PC market to 16.9% in the 2003 calendar year from 15.1% in 2002, according to market research firm IDC. Archrival Hewlett-Packard Co. finished 2003 with 16.4% market share, according to IDC.
At the same time, Dell has branched out into other areas including printers and consumer electronic equipment such as liquid-crystal-display TV sets and digital music players.
“They’re setting their sights on other areas of the market and seeing pretty good success,” Bracelin said. “They’re executing very well and continue to do a pretty good job of managing all the different variables from a cost standpoint.”
Dell shares, which dipped 12 cents to $33.57 in regular Nasdaq trading, rose to $34.11 in extended trading after the earnings report.
