Dell Sales Are Up, but Profit Drops
Strong holiday sales helped propel Dell Inc. to a seventh straight quarter of record revenue Thursday, but a one-time tax charge weakened earnings and rattled investors.
Dell said fiscal fourth-quarter profit fell 11% to $667 million, or 26 cents a share, from $749 million, or 29 cents, a year earlier. Profit would have been 37 cents a share without the one-time charge for repatriating $4.1 billion in overseas profit under the American Jobs Creation Act.
Revenue for the quarter that ended Jan. 28 rose 17% to $13.5 billion.
For the year, Dell posted profit of $3.04 billion, or $1.18 a share, up 15% from $2.65 billion, or $1.01, the year before. Revenue rose 19% to $49.2 billion.
Dell shares rose 58 cents to $41.57 in regular Nasdaq trading. They fell to $40.25 in after-hours trading following the earnings announcement, during which Dell executives forecast little to no growth in the first quarter.
“It was a good quarter relative to other tech companies, but uninspiring,” said Brent Bracelin, an analyst with Pacific Crest Securities in Portland, Ore. “Dell has a bar that’s higher than others, so investors were a little disappointed with their guidance for the first quarter.”
Round Rock, Texas-based Dell, the world’s largest personal computer maker, predicted that first-quarter revenue would come in at $13.4 billion, a shade lower than the $13.5-billion consensus estimate from Wall Street analysts surveyed by Thomson First Call.
“We have an environment heading into 2005 where the core business of the PC market grew 15% last year, but we expect it to slow to 8%-9% in 2005,” Bracelin said. “Dell grew 18.7% in 2004, so the concern is that in an industry that slows to the high-single digits, can Dell continue to accelerate share gain, or find other areas to grow into at that kind of rate?”
Dell’s results came a day after archrival Hewlett-Packard Co. sacked its chief executive over lackluster performance in chasing elusive profitability, a move Dell’s chief executive said could open up some opportunities for the low-cost computer manufacturer.
“What we’re focused on is going after customers with our products and technologies in a somewhat unsettled environment,” CEO Kevin Rollins said in a conference call with reporters.
He said that Dell on track to attain revenue of $60 billion in the current fiscal year -- a year ahead of schedule -- and said Dell had a new goal of reaching $80 billion in annual sales in the near future.
He would not give a date for achieving that milestone, but said more details would come out at Dell’s analyst meeting scheduled for April in Texas.
Dell, Rollins said, is “demonstrating a consistency of execution that is unmatched in our industry.”
