Dell sales jump 16pc, led by server and storage growth

14 Nov 2003

Computer giant Dell reported a record third quarter with revenues up 16pc on the previous year to hit US$10.6bn. While sales throughout the rest of the computer industry are generally flat, the company said that overall revenues are 40pc higher than two years ago.

Dell’s global server shipments increased 30pc, almost twice the combined rate of other companies. Sales of external storage systems jumped 68pc in the quarter. The company’s total revenue from enterprise computing systems was up 32pc. Third quarter Dell earnings were 26 cents per share, a 24pc increase.

Third quarter operating expenses were 9.6pc of revenue, equalling a company record. Despite sharp industry price competition and slower than expected declines in component costs, Dell’s operating profit was 8.6pc of revenue for the second straight quarter. Operating income was US$912m, up 20pc from a year ago.

Dell, which employs over 4,300 people in Ireland, generated US$1.1bn in cash from operations in the quarter. Total cash and investments at the end of the period was US$11.0bn, another company record.

Dell’s overall volume growth of 22pc enabled it to gain 1.5 points of additional global market share. Product shipments in five strategic markets — China, France, Germany, Japan and the United Kingdom — rose a combined 32pc in the third quarter.

Total Dell shipments in Europe, the Middle East and Africa increased 26pc, seven points ahead of the average for the rest of the industry. Volumes were up 24pc or more in every regional product category.

In terms of server shipments, the company ranks number one in the US and number two worldwide. In terms of storage systems, through the first two years of Dell’s partnership with EMC, more than 7,000 customers have purchased Dell/EMC storage systems.

Demand for Dell services grew strongly in the third quarter. Services revenue was up 31pc to an annual run rate of US$2.6bn.

Quarterly shipments of Inspiron and Latitude notebook computers increased 31pc, and those of Dimension and OptiPlex desktop computers were up 20pc.

Revenue from software and peripheral products rose 26pc in the third quarter. The company has sold more than one million Dell printers since their launch in March. Shipments of Dell printers were up nearly 70pc from the second quarter, and the company expects sequential growth of more than 80pc in Q4. During the third quarter, Dell introduced its own digital music players and LCD television/computer monitors, and new versions of the company’s Axim handheld computers and digital projectors.

“Customers and investors get best value over time from companies like Dell that are growing and financially very healthy,” said Michael Dell, chairman of the board and chief executive officer. “The market should insist on both, and it’s a credit to our teams and a better way of doing business that we’re consistently meeting those expectations.”

Dell said the company anticipates its fourth-quarter shipments will be up more than 25pc year-over-year, and will again outpace the rest of the industry. Dell expects revenue of US$11.5bn in the fourth quarter, an increase of 18pc, and earnings per share of 28 cents, up 22pc.

By John Kennedy