Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Non-Tech : EARNINGS REPORTING - surprises, misses & more -- Ignore unavailable to you. Want to Upgrade?

To: 2MAR$ who wrote (84)	5/12/2000 3:56:00 AM
From: 2MAR$	Respond to of 762

5/11...Dell's Profits Top Estimate on 31 Pct Revenue Rise dailynews.yahoo.com NEW YORK (Reuters) - Dell Computer Corp.(NasdaqNM:DELL - news) on Thursday reported a 31 percent increase in revenues and higher first-quarter earnings that topped estimates, as the world's No. 2 personal computer maker reversed the rocky ride of the two previous quarters. ``All of the arrows are pointing in the right direction here,'' Banc of America Montgomery analyst Kurt King said in response to the results. Dell said net income rose to $525 million, or 19 cents per share, from $434 million, or 16 cents, a year ago. Analysts had expected 16 cents in profits in the latest quarter, according to a survey by research firm First Call/Thomson Financial. Revenue rose to $7.28 billion from $5.54 billion in the year-earlier quarter. Round Rock, Texas-based Dell reported its results after the market close. The stock rose 3 points in after-hours trade to 47 11/16, according to Instinet, from its Nasdaq stock market closing price of 44 11/16. In a conference call after the report, Dell officials breezed through a series of numbers that pointed to smooth sailing ahead -- including stronger profit margins and signs of improvement in Europe, a region that has caused a drag on revenue growth for the past year. In the third and fourth quarters of last year, Dell had to warn investors prior to its earnings reports that the results would fall short of the current Wall Street expectations. Citing components shortages and other issues, Dell advised investors earlier this year no longer to expect revenues to grow by 40 to 50 percent -- the historic levels Wall Street had become accustomed to seeing. Instead, Dell lowered the bar for revenue growth to the low-30 percentage range -- a level it comfortably cleared in the first-quarter report on Thursday. ``The old Dell would beat the numbers and then crank the bar up,'' said Robertson Stephens analyst Dan Niles. ``Then they blew it.'' ``The smart thing to do is not raise the bar so high that you have a problem. It's better to be conservative and destroy the number,'' he said of the more sober approach to managing investor expectations. In a telephone interview, Dell Vice Chairman Kevin Rollins said the company was confident it could continue to see revenues grow in the low 30s percentage range -- a rate which remains double the industry average. ``Our goal is to have a very good and positive multiple of the industry rate,'' he said. ``At our size now we do not want to overheat our whole business process here,'' Rollins said, referring to the ``law of large numbers'' which dictates that growth slows as the company captures an ever larger percentage of the market. ``What we have here is achievable optimism,'' said J.P. Morgan analyst Daniel Kunstler. Gross margins, or profit expressed as a percentage of revenue, climbed to 20.5 percent from 19.2 percent in the fourth quarter as the company benefited from lower prices for the memory chips built into PCs. Chief Financial Officer James Schneider said he expected operating margins to reach about 10 percent by the fourth quarter and about 9 percent for the year as a whole. Dell posted an operating profit margin of 8.6 percent in the first quarter. ``I was surprised he said the margins could break 10 percent by the end of the year,'' said Niles of Robertson Stephens. In response, he said he planned to raise his financial forecasts on Dell on the basis of its first-quarter report. Dell executives said the company was making progress in expanding into the higher growth business of providing powerful computers that run Web sites and electronic commerce tasks, shifting away from its reliance on desktop computers. Sales of the company's workstations and notebook PCs, as well as storage products and computers known as servers that run Web sites and electronic commerce tasks, rose to 48 percent of total system sales, Dell said. By contrast, commodity-like desktop computers declined to 52 percent from 61 percent a year ago. ``They are uniformly gaining market share in servers and notebooks,'' said Bear Stearns analyst Andrew Neff. ``They've identified the opportunities and they are going after them,'' he said of Dell's strategy of cherry-picking the best segments. Dell said sales were strong in North America and Asia, but its European business was still relatively sluggish, growing only 17 percent. But Rollins said Europe could match or perhaps even exceed Dell's overall sales growth goal of between 30 and 33 percent by later this year. ``We see it performing by the end of the year ... at or above the corporate average,'' he said. ``We believe it could be a net adder.'' Such a turnaround in Europe would give an enormous boost to the company's prospects overall, analysts said. ``That is so positive for the overall story,'' said King. ''Europe has been a drag on growth rate in the last four quarters. If Dell fixes Europe, there's no telling what they can do.'' E-mail this story - (View most popular) \| Printer-friendly format