Dell sales jump 21pc, margin erosion worries investors

14 May 2004

Dell’s first quarter revenues were up 21pc to US$11.5bn on the back of explosive growth in Europe and the Far East.

The computer hardware giant recorded sales growth of 38pc in Asia Pacific and Japan and 37pc in the EMEA region.

Despite the strong revenues, shares in the company fell by 3pc in after-hours trading after investors reacted to a slight fall in gross margins from 18.2pc in the fiscal fourth quarter to 18pc in the first quarter.

Dell has over 4,000 employees in Ireland, at Bray, Co Wicklow, and its European manufacturing hub in Limerick.

Product shipments for the period ended 30 April were up 25pc from the same quarter a year ago, nearly double the overall industry growth of 14pc.

Shipments of Inspiron and Latitude notebook computers leapt 39pc, while Dimension and OptiPlex desktop computers were up 21pc.

Net earnings were US$731m, or 28 cents per share, 22pc higher than a year ago.

Dell server volumes in Asia Pacific and Japan increased 33pc. Dell Japan ranked No 1 in shipments of standards-based servers for the first time. Already No 1 in servers in China, Dell now is the top supplier in that product category in the region’s two largest markets.

In its home (US) market, Dell shipments rose 18pc, driven by strong demand from small and medium-sized businesses and consumers and more generous corporate spending.

Revenue from Dell/EMC storage systems rose 25pc, as the company focuses its sales efforts around mid-range storage area networks.

First-quarter revenue from software and peripheral products was up 39pc, helped by strong demand for Dell printers.

Dell already sells printers in selected European and Asian markets, and will introduce its first such products in Japan during the second quarter. The company plans to launch several new printers in the US in the next few weeks.

The company was predicting a similar performance level in the second quarter: revenues of approximately US$11.7bn, up 20pc, and per-share earnings of 29 cents, a 21pc increase.

By Brian Skelly