Dell Updates Investors On Second-Half Operating Environment
Company Reaffirms Strong Margin Outlook, is Cautious About 30-Percent Growth Target
Wednesday October 4, 4:13 pm Eastern Time
ROUND ROCK, Texas---Oct. 4, 2000--Dell (Nasdaq:DELL - news) today will tell attendees at its fall analyst meeting that the company remains very optimistic about its profitability outlook for the third quarter of the current fiscal year, and believes revenue will continue to expand at a multiple of the industry rate.
Profit margins remain firm, and have benefited from lower-than-expected component costs.
Through the first two months of the current quarter, Dell's European demand has been weak and growth in sales to worldwide small-business customers, though much faster than the industry rate, has been somewhat short of internal plans. As a result, the company's third-quarter revenue is trending about three percent below its expectations -- but still toward a healthy 7-percent sequential growth rate. If the softness persists into the fourth quarter, Dell's full-year revenue could be $32 billion, an increase of about $7 billion, or 27-percent, from sales for fiscal 2000.
Demand in other parts of Dell's business -- namely from global, large corporate, enterprise, education and home-PC customers, and within Asia-Pacific and Japan -- is very strong. Dell said it remains on track to meet the company's profit expectations for the third quarter, although fourth-quarter per-share earnings could be one to two cents below company targets.
Optimism around third-quarter profitability is driven in part by favorable component availability. Dell's plans to reduce prices across its product lines have been bolstered by an unanticipated decline in component costs. Those pricing actions will likely have a greater effect in stimulating demand and revenue growth in the fourth quarter of the year.
More broadly, Dell will use the analyst meeting to describe how the fundamental advantages of its customer-focused direct business model remain as compelling as ever in both its base personal-computer business and among more profitable enterprise-class products: workstations, servers and storage products.
The company will explain how a variety of industry drivers should allow Dell to create superior shareholder value over time. Those drivers include international expansion; an ongoing customer transition to mobile computing products; growing adoption of Microsoft Corp.'s Windows 2000 and the Linux operating systems for enterprise-computing applications; planned introductions of new microprocessors from Intel Corp.; and demand for products and services associated with the global build-out of the Internet infrastructure.
The company's fall analyst meeting takes place today and Thursday in Austin, Texas. Attendees will include reporters from several major business-news organizations. The meeting is available for viewing to anyone with Internet access at www.dell.com/investorwebcast/. Today's portion begins at 3:15 p.m. (CDT); the meeting resumes Thursday at 8 a.m. (CDT).
About Dell
Dell Computer Corporation (Nasdaq:DELL - news) is the world's leading direct computer systems company, based on revenues of $28.5 billion for the past four quarters, and is a premier provider of products and services required for customers to build their Internet infrastructures. The company ranks No. 56 on the Fortune 500, No. 154 on the Fortune Global 500 and No. 3 on the Fortune ``most admired'' lists of companies. Dell designs, manufactures and customizes products and services to customer requirements, and offers an extensive selection of software and peripherals. Information on Dell and its products can be obtained on the World Wide Web at www.dell.com.
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Dell disclaims any proprietary interest in the marks and names of others.
Special note: Statements in this press release that relate to future results and events (including statements regarding the company's growth expectations) are based on the company's current expectations. Actual results in future periods may differ materially from those currently expected or desired because of a number of risks and uncertainties, including the level of demand for the company's products and services; the intensity of competition; currency fluctuations; the cost and availability of certain key components; and the company's ability to effectively manage product transitions and to continue to expand and improve its infrastructure (including personnel and systems). Additional discussion of these and other factors affecting the company's business and prospects is contained in the company's periodic filings with the Securities and Exchange Commission. |
