Dell outperforms rivals with strong sales and profits

By Alun Williams

Posted on 14 Feb 2003 at 12:19

Dell, the world's second largest PC builder, has recorded its best ever figures for revenue and operating profit in its latest quarterly financial results.

For the three months ending 31 January, Dell has recorded a 25 per cent increase in shipments resulting in a 21 per cent increase in revenue to $9.7bn. The bottom line is a profit of $603m, up 32 per cent from the $456m of the same quarter a year ago.

Of course the time period for Dell's fourth quarter (November, December, January) includes the Christmas surge in technology spending. When looking at the year as a whole, however, the picture still remains rosy for Dell. Year on year it has seen revenues rise (up 14 per cent to $35.4bn) and profits climb (net income was up 19 per cent to $2.12bn).

An important factor in Dell's results was success in the server market. It saw a 28 per cent increase in shipments of PowerEdge servers, which it claims was more than five times larger than server volumes for the rest of the industry. Dell says that it now ranks number one in the US and number two worldwide, in terms of shipments of servers based on both Windows and Linux.

Combined shipments of Inspiron and Latitude notebook computers also increased, by 33 per cent, which Dell claimed was nearly three times the rate of industry-wide notebook growth.

Dell's president and chief operating officer, Kevin Rollins, believes the tough economic conditions had benefited Dell. 'Customers always look for higher levels of value, particularly when economic conditions are weak,' he said in the company's official statement accompanying the results.

'The Dell team is exceptional at continually increasing customer value,' he added. 'That's why we're profitably gaining market share, and consistently producing industry-leading operating results. This performance would be outstanding in any environment, and we have no intention to depart from a very successful strategy.'

Dell is famous for its build-to-order, direct-sales business model and this has helped it to remain competitive amid falling component prices and the squeeze on consumer spending.

As for the future, Dell expects to see further growth in a subdued market. The company's official projection is for a further 25 per cent increase in shipments in the next three months compared with 'anticipated industry growth at a low single-digit rate'.