| | Dell Execs Encouraged By Activity In Corporate Markets
By BOB SECHLER
Of DOW JONES NEWSWIRES
(This article was originally published Thursday)
COMPARE THIS WITH CARLEY'S DOWNBEAT ASSESSMENT YESTERDAY, (my emphasis)
AUSTIN, Texas -- Dell Inc. (DELL) executives said Thursday that they're seeing an uptick in technology spending by large corporate customers as the economy slowly improves.
"Businesses are growing, (and) the signs are getting relatively healthy," Dell Chief Executive Michael Dell said during a conference call with the news media.
Chief Financial Officer Jim Schneider noted that "the number of opportunities we had to bid in the corporate sector" increased in the fourth quarter, a trend he called encouraging.
Still, both Schneider and CEO Dell said the small and medium business markets are likely to continue to be more robust than the large corporate market in the first quarter.
The company forecast earnings for its fiscal first quarter of 28 cents a share, in line with Wall Street expectations, compared with 23 cents a share in the year-ago period.
Dell said first-quarter revenue will climb 17.5%, to $11.2 billion - also in line with Wall Street views - from $9.53 billion in the year-ago period.
Earlier Thursday, Dell Inc. reported fiscal fourth-quarter net income of 29 cents a share, or $749 million, compared with net income of 23 cents a share, or $603 million, in the year-ago period.
Revenue climbed about 18%, to $11.5 billion from $9.73 billion a year ago.
The earnings figure edged Wall Street's mean expectation of 28 cents a share, according to Thomson First Call, although the revenue figure was in line with the average view and Dell's own prior guidance.
CFO Schneider said the company's fourth-quarter tax rate came in slightly lower than expected at 27.3%, which helped its earnings exceed the mean forecast by a small amount.
Meanwhile, the company said overall unit shipments should climb more than 20% in its fiscal first quarter, compared to the year-ago period, on the heels of a 25% climb in the fourth quarter.
The first quarter traditionally is seasonally slower than the fourth quarter because of a drop-off in consumer sales.
Schneider emphasized that Dell is focused on "profitable growth" in particular, meaning higher-margin products such as computer servers and storage devices.
"We continue to grow faster than the rest of the industry in strategic product categories," he said, pointing out that Dell's fourth-quarter server shipments climbed 40% from the year-ago period.
Overall, however, "we're seeing improvements in all aspects of our business, with positive unit growth in every segment," he added.
Dell executives described the fourth-quarter pricing environment as "competitive," particularly for low-end systems, although they said it's been that way for some time.
"Yes, it's a competitive market," CEO Dell said. "And, yes, we're winning."
Still, company executives disparaged the strategies of some competitors, which they didn't name, for selling low-end computers below cost to drive sales of related product lines.
CEO Dell referred to such tactics as "subsidy-based (business) models" later Thursday on a conference call with analysts.
Dell's average unit selling price came in at $1,540 in the fourth quarter, compared with $1,620 in the third quarter and $1,640 in the year-ago fourth quarter.
Still, Dell's fourth-quarter gross margin registered 18.2%, flat from 18.2% in the third quarter and off only slightly from 18.3% in the year-ago fourth quarter.
Meanwhile, company executives said they expect computer component costs to decline moderately in the fiscal first quarter, with CFO Schneider estimating that they could fall by a half percentage point a week overall.
The company also told analysts that it intends to increase its share buybacks during its current fiscal year.
Schneider said the company will repurchase about $600 million of its own shares per quarter, an increase of about $100 million per quarter from the prior year.
- By Bob Sechler; Dow Jones Newswires; 512-236-9637
Updated February 13, 2004 7:37 a.m. |
|
