Dell boosts third-quarter revenue and net income

Dell Computer continued its solid performance in the face of a continued PC market slump, posting third-quarter net income of...

Dell Computer continued its solid performance in the face of a continued PC market slump, posting third-quarter net income of $561m (£355.5m), up 31% from last year's third quarter.

Revenue at the company increased to $9.1bn, up 22% from $7.5bn in the third quarter last year.

Enterprise products led the charge, with Dell's combined product roster of servers, storage, workstations and network switches increasing a combined 27%. Revenue from servers alone was up 24%.

"Dell's primary opportunities for growth remain in servers, storage and enterprise services," said chief financial officer Jim Schneider.

However, consumer products were also strong at Dell, with shipments to consumers increasing 51% year-on-year. Dell has reassumed the title of world's biggest PC maker after losing ground to Hewlett-Packard /Compaq in the second quarter.

Sales of desktop PCs accounted for 52% of Dell's revenue. Shipments of Latitude and Inspiron notebooks climbed 26% and overall notebook sales represented 28% of Dell's revenue.

The company's results were also strong worldwide. Dell's consumer business was not as strong in other parts of the world as it was in the US but its strength in servers made up for that deficit.

Shipments to Europe, the Middle East and Africa were up 13% from last year's third quarter, with server shipments to Germany rising 60%. Dell also increased its business in Asia-Pacific, posting overall unit growth of 28% from the previous third quarter.

Dell is expected to unveil its long-awaited handheld device next week at the Comdex trade show in Las Vegas. The Axim X5 will be based on Microsoft's Pocket PC handheld operating system.

The Axim will be priced at $199 or $299, depending on the speed of the XScale processor from Intel. It represents another example of Dell's strategy of bringing low-cost products to market through its ability to manage manufacturing costs.

The company predicted fourth-quarter 2002 revenue would increase 20% from the fourth quarter of 2001 to $9.7bn, with shipments increasing 23% from last year's fourth quarter and 10% from the current third quarter.

Many corporations are anticipating PC upgrades next year, which could also boost Dell's fortunes.

"This year would have marked the traditional three-year upgrade cycle [following the cycle that preceded Y2K]. Due to the economic challenges around the globe, we think many corporations are holding off on capital expenditures in general, not just IT expenditures. It's our belief that the upgrade cycle will still come, but we haven't seen any sign of it and we won't until we see an overall improvement in the economy," Schneider said.

Dell partner Intel is pushing companies to upgrade their PCs gradually before problems or new software requires them to upgrade in bulk.

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