The WSJ take on earnings: seems bullish.
Dell Computer's Earnings Rise
As Sales Through Web Site Surge
An INTERACTIVE JOURNAL News Roundup
Dell Computer Corp. reported a nearly 55% rise in net income for its latest period
Thursday as revenue grew 51%.
For the third quarter ended Nov. 1, the Round Rock, Texas, personal-computer
maker reported net income of $384 million, or 28 cents a diluted share, compared with
net income of $248 million, or 17 cents a share, in the year-ago quarter.
The results beat analysts' estimates by a penny a share, but the so-called whisper
number on Dell -- the unofficial estimate that circulates in advance of a company's
report -- was 30 cents a share, and some traders and analysts reported hearing
numbers slightly above that.
Revenue, meanwhile, surged 51% to $4.82 billion from $3.19 billion a year earlier.
Dell said online sales tripled compared with a year
ago; for the first time, such sales topped $10 million
a day, helped by a strong surge in corporate
accounts. Dell began selling on the Web in July 1996, and by early 1997, the
company was recording $1 million a day in sales. Dell has said it hopes to generate
half of its overall sales over the Web by the end of the decade.
Dell Chairman and Chief Executive Michael Dell issued a bullish outlook for both his
company and the PC industry as a whole, saying Dell is targeting annual growth of
50%. With a 9% share of the market, company has plenty of room to grow and plans
to take advantage of that, he said.
Mr. Dell said the PC market will continue to grow by an average of 17% annually
over the next three years as high-speed cable Internet access becomes a reality for
more home computer users. Some industry watchers think this will drive computer
prices down, since the Internet -- not the PC itself -- is what consumers would
actually want. But Dell counters that users will want more robust machines to serve
as their on-ramps to the Web. And even if the PC market were to slow down, his
company and its top three competitors would still see strong growth as users
continue to migrate to a few well-known brands, he said.
Dell, whose direct-sales method requires little inventory, has capitalized on the
falling prices of PC components such as chips and disk drives, turning in stellar
results even as its competitors have struggled. The company has attributed the
decline in average selling prices for PCs to lower prices for those parts. Most PC
makers have had to sell many more computers to make up for sharply lower average
prices. |
