MORE$: Are we related at all? :)
Thanks for taking care of the Dellionaires. Anyway, I believe you're one of them. As for me, I'm still a Dellionaway.
Cheers,
Mick $$$
Dell posts solid 2Q
Round Rock, Texas, Nov. 11 (Bloomberg) -- Dell Computer Corp., the world's biggest direct seller of personal computers, said fiscal third-quarter net income fell 17 percent because of costs from an acquisition. Revenue rose 41 percent.
Net income in the quarter ended Oct. 29 dropped to $289 million, or 11 cents a share, from $348 million, or 14 cents, in the year-earlier period. Dell said it would have earned $483 million, or 18 cents, without costs from its purchase of ConvergeNet Technologies Inc., matching analyst forecasts.
Dell warned investors last month that rising memory-chip prices and a shortage of parts caused by a September earthquake in Taiwan would reduce profit. Investors focused on whether those issues, falling prices for PCs and slower corporate sales because of Year 2000 concerns would cut Dell's revenue as well.
''They have alleviated any of the concerns about a slowdown,'' said Steven Salopek, an analyst with Banc One Investment Advisors, which owns almost 11 million Dell shares. ''It was very reassuring.''
Revenue rose to $6.78 billion from $4.82 billion, in line with analyst forecasts. The company said it's selling $35 million worth of computers a day on the Internet, or 43 percent of its sales.
Dell shares rose 2, or 4.8 percent, to 43 7/16 before the report. They climbed as high as 44 15/16 after the release.
Dell has been the best-performing stock in the Standard & Poor's 500 Index this decade, with its shares rising more than 75,000 percent during that time. This year, though, they've gained about 19 percent, their worst performance since 1993. ''It's certainly not been a disastrous year,'' said Tim Ghriskey, a portfolio manager for Dreyfus Corp., which owns about 3.8 million Dell shares. ''But when you look at some of the dot-coms and other technology issues, it's nderperforming them.''
Memory, Y2K Okay
Costs for memory chips more than doubled in the quarter, with a 25 percent increase in the last few weeks of October, Dell Chief Financial Officer Tom Meredith said in an interview.
Because Dell sells directly to customers and keeps little inventory in its factories, parts shortages affect it more than PC makers such as Compaq Computer Corp. that sell to retailers and distributors, said Ashok Kumar, an analyst with US Bancorp Piper Jaffray.
At the same time, that may help the company now that memory
chip prices are falling again, he said. ''When components are in short supply, they feel the pinch,'' said Kumar, who rates Dell a ''buy.'' ''The same thing works in their favor when prices turn around.''
Dell has negotiated with component makers to ensure it gets the supplies it needs. ''We are well-positioned with our suppliers,'' Meredith said.
Dell struggled with a shortage of flat-panel screens during the quarter, although that problem eased after the company invested $200 million in Samsung Electronics Co. in return for a stable supply of the screens. ''We're seeing a significant improvement in the availability of flat-panel screens,'' Chairman Michael Dell told analysts during a conference call.
The company is seeing little evidence of corporate customers slowing PC purchases because of Year 2000 concerns, Meredith said. ''Demand continues to be robust,'' he said.
Demand Rises, Prices Fall
Sales of larger computers such as servers, workstations and data-storage equipment surged 72 percent in the quarter. Dell's push to boost sales to consumers paid off, with sales in that area rising 62 percent. Notebook sales climbed 55 percent.
The average price for Dell's desktop and laptop computers fell to about $2,100 from $2,400 during the period. Prices have been falling as Dell gets into the more-competitive market for consumer machines.
The third-quarter results include costs of 7 cents a share for in-process research and development from the Oct. 27 purchase of ConvergeNet.
Analysts polled by First Call Corp. expected a profit of 18 cents without the costs. Some estimates published on the Internet were as high as 21 cents. |
