Best ever quarter for Dell

15 Aug 2003

Dell has posted its best ever quarterly results on the back of continuing strong growth in servers and storage systems. Revenue for the three months to 1 August was US$9.8bn, a rise of 16pc from the same period a year ago, and total product shipments grew by 27pc compared with Q2 2002.

The hardware maker reported operating income of US$840m for the quarter, an increase of almost 25pc on the same quarter last year. For the six months to date, Dell’s revenue was US$19.3bn and its operating income was US$1.6bn, a 17pc and 30pc improvement respectively from the first half of 2002. Second-quarter operating expenses were a record low 9.6pc of revenue, down from 9.8pc in the first quarter and 9.9pc a year ago.

Commenting on the results, Dell president and COO Kevin Rollins said: “We’ve again shown Dell’s unique ability to profitably earn a larger share of business by focusing on standards-based technologies, managing costs and creating value for customers. We’ve done that regardless of the pace of industry demand and the appetite of others to generate sales, even at a loss.”

He added that industry shipments in the third quarter would be likely to grow at a rate in the high single digits from one year ago. However Dell expects its volumes to increase more than 25pc. The company believes such growth would generate record company revenue of about US$10.5bn, a 15pc increase from the prior year.

The company’s second-quarter growth earned it nearly three points of additional global market share, and the company outpaced average industry growth in all regional markets and worldwide product categories. Profitability in Europe, the Middle East and Africa (EMEA) was up almost 90pc. The company’s quarterly performance was highlighted by combined server growth of 30pc – nearly twice that of other companies – in the UK, France and Germany, three of its most strategically important markets. According to recent IDC figures, Dell is the leading Intel-based hardware supplier in Ireland, with a market share of 33.8pc for the second three months of the year.

Dell claimed that its 27pc increase in second-quarter server shipments was eight points higher than the average server growth for other companies. The computer company, which has substantial operations in Ireland, has been putting increased focus on storage systems through alliances with companies such as EMC. The strategy appears to be paying off, as Dell’s revenue from external storage systems grew 46pc to an annual run rate of more than US$1.5bn.

By Gordon Smith