Greg: I think we may be ready for a nice run up <G>....
<<Wednesday August 18 1:26 AM ET
Dell Net Beats Consensus
By Eric Auchard
NEW YORK (Reuters) - Dell Computer Corp. (Nasdaq:DELL - news), the No. 2 ranked personal computer maker, Tuesday said its second-quarter profits grew 47 percent, safely ahead of expectations, amid solid performance across its businesses.
Dell, a direct seller of PCs via telephone, mail order and increasingly via the Internet, said profits for the quarter ended in July grew to $507 million, or 19 cents per share, from $346 million, or 12 cents a share, in the year-ago quarter.
Quarterly revenues rose 42 percent to $6.1 billion, on track with Wall Street expectations and in line with recent quarterly trends, but lower than its historic rates of growth above 50 percent.
Second-quarter earnings of 19 cents per share bested Wall Street analysts' consensus of 17 cents per share, according to brokers surveyed by financial research firm First Call/Thomson Financial.
Company founder, chairman and CEO Michael Dell said in a statement that uncertainty over new PC purchases tied to potential Year 2000 glitches is diminishing, and overall demand should be very healthy in the current year's second half.
''Based on what customers are telling us, we expect sequential industry growth to follow historical trends, Y2K notwithstanding,'' Dell said.
Pointing to a survey of 900 key Dell technology buyers, he added: ''We're very optimistic about our ability to grow at a multiple of the industry rate.'' Market researcher Dataquest predicts industry shipments to grow about 18 percent in 1999.
Stepped-up demand by U.S. government agencies, consumers and small businesses should insure a strong second half of the year, offsetting purchasing delays by some corporate customers as they fix Year 2000 glitches in older computers, he said.
During the quarter, Dell said it edged ahead of rival Compaq Computer Corp. (NYSE:CPQ - news) to become the No. 1 U.S. supplier of personal computers, fueled in part by 100 percent growth in PC sales to U.S. consumers. But Compaq kept well ahead globally according to industry surveys of the two firms' shipments.
In an interview with Reuters following the earnings report, Dell said he expects the company to widen its U.S. market share lead over Compaq during its fiscal third quarter ending in October, given Dell's track record of far faster growth, and given Compaq's recent sales turmoil and ongoing restructuring.
Dell said its total second-quarter computer shipments rose 55 percent, or twice the industry growth rate calculated by PC industry market researchers.
PC server, workstation and data storage sales to corporate customers grew 85 percent, despite a strong year-ago quarter performance. Quarterly notebook sales rose 49 percent, amid an industry shortage of display screens that cost it some sales.
Geographically, Dell said revenues from the Americas region grew 48 percent, led by sales of computer systems to consumers, small businesses and government agencies. Dell's shipments in the Asia-Pacific region and Japan rose 52 percent.
But Europe proved a continuing weak spot, as revenue growth was a sluggish 24 percent year-to-year, continuing a slowing trend begun earlier this year. Still, that rate was more than double the industry pattern, helping it strengthen its hold on the No. 2 market share position in the region, Dell said.
''We're not pleased with 24 percent growth,'' Dell told Wall Street analysts during a conference call following the earnings report, as he noted that the company had headroom for further sales in the region. In July, Dell replaced its regional management team to address the flagging growth.
''I would be very surprised if we don't see accelerating growth rates in Europe as we go into Q4 and Q1,'' he said, referring to Dell's fiscal fourth quarter ending in January 2000 and the first quarter of fiscal 2001 ending next April.
During July, Dell said Internet sales to its customers reached $30 million per day, representing nearly 40 percent of company revenue. In a measure of its Internet sales success, Dell online sales were double the combined revenue of the other top 20 Internet shopping sites, as measured by Media Metrix.
''We believe that we're among the leaders in any industry in bringing the Internet's massive efficiencies to bear on our own business,'' Dell said.
Dell's ability to sustain its explosive rates of growth is especially dramatic in light of the growing popularity of low-cost consumer PCs below $400, or even ''free'' offers in return for multi-year Internet service subscriptions.
Highlighting these pressures, Dell's average selling prices per computer dropped to $2200 from $2300 in the prior quarter, Dell said in the conference call with Wall Street analysts.
Following the report, shares of Dell gained 2 to 43-1/8 in after-hours trading, rebounding from a decline of 5/16 of a point in the stock during regular session trading on Nasdaq. Dell had closed at 41-7/16 Monday.
Kevin McCarthy, an analyst with brokerage Donaldson Lufkin & Jenrette, said the second-quarter's profits of 19 cents per share were a penny ahead of the unofficial ''whisper'' number circulating among Wall Street traders ahead of the report.
''I think the stock is going to trade higher, even in a tough tech tape,'' McCarthy said, using investor jargon to suggest Dell shares could move higher Wednesday despite the difficult trading environment for hi-tech stocks recently. >>
dailynews.yahoo.com
See you in the 50s..!!
Best Regards,
Scott |
