Dell again demonstrated its unique ability to simultaneously deliver high customer value, solid worldwide share gains and leading profitability, achieving record company operating results in the fiscal third quarter.
Dell`s global server shipments increased 30 percent, almost twice the combined rate of other companies. Sales of external storage systems jumped 68 percent in the quarter. The company`s total revenue from enterprise computing systems was up 32 percent.
For the three months ended Oct. 31, Dell`s net revenue was $10.6 billion, 16-percent higher than in the year-ago quarter. Company revenue was more than 40-percent higher than two years ago; sales by the rest of the industry are essentially flat over the same period. Third-quarter Dell earnings were 26 cents per share, a 24-percent increase.
"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."
Mr. Dell said the company anticipates its fourth-quarter shipments will be up more than 25 percent year-over-year, and again outpace the rest of the industry. Dell expects revenue of $11.5 billion, an increase of 18 percent, and earnings per share of 28 cents, up 22 percent.
Third-quarter operating expenses were 9.6 percent of revenue, equalling a company record. Despite sharp industry price competition and slower than expected declines in component costs, Dell`s operating profit was 8.6 percent of revenue for the second straight quarter. In dollar terms, operating income was $912 million, up 20 percent from a year ago.
Dell generated $1.1 billion in cash from operations in the quarter. Total cash and investments at the end of the period was $11.0 billion, another company record.
Company gains additional share in critical markets
Dell`s overall volume growth of 22 percent 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 32 percent in the third quarter.
Asia-Pacific and Japan led the company`s regional growth with a 35-percent increase, nearly three times the combined rate of other companies. Dell`s strength in the region was most profound in servers and notebook computers, which were up 37 and 36 percent, respectively.
Company performance in China was exceptional, including a 67-percent increase in volumes of servers and a 70-percent gain in notebook computers. The company`s 25-percent growth in Japan moved it to the No. 3 share position in the market, up from No. 4 a year ago.
Total Dell shipments in Europe, the Middle East and Africa increased 26 percent, seven points ahead of the average for the rest of the industry. Volumes were up 24 percent or more in every regional product category. Technology Business Research (TBR) for the first time ranked Dell No. 1 in U.K. customer satisfaction in servers, notebook computers and desktop computers at the same time. Based on TBR`s most recent surveys, the company also holds the same distinction in all three product categories in France and Germany.
Dell`s 30-percent shipment growth in the U.K. was more than twice the rest of the industry, as the company gained nearly three points of share from a year ago and reclaimed market leadership. Server shipments in France increased 37 percent, more than double the industry without Dell.
Company product shipments in the Americas and the United States rose 20 percent, strongly ahead of the average of other companies. Dell systems sold to U.S. consumers were up 28 percent, while those to small and medium businesses and federal, state and local governments both increased 22 percent.
Performance in servers, storage, services remains strong
Dell`s PowerEdge servers continued to earn customer demand and favourable recognition from reviewers in the third quarter. PC Magazine gave the PowerEdge 1750 a perfect overall rating for performance, manageability and serviceability and an "Editors` Choice" award.
Dell`s increasing leadership in servers-the company ranks No. 1 in shipments of such products in the U.S., No. 2 worldwide-is driving growth in storage systems. Through the first two years of Dell`s partnership with EMC Corp., 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 31 percent to an annual run rate of $2.6 billion.
Quarterly shipments of Inspiron and Latitude notebook computers increased 31 percent, and those of Dimension and OptiPlex desktop computers were up 20 percent. In its most recent report on U.S. corporate buying behaviour and customer satisfaction for desktop computers, TBR said Dell demonstrated strength in 10 of 13 categories and had no weaknesses. The next-best computer supplier showed strength in only two areas.
Revenue from software and peripheral products rose 26 percent 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 70 percent from the second quarter, and the company expects sequential growth of more than 80 percent 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.
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Dell Inc. (NASDAQ: DELL) is a premier provider of products and services required for customers worldwide to build their information-technology and Internet infrastructures. Company revenue for the past four quarters totalled $39.7 billion. Dell, through its direct business model, designs, manufactures and customizes products and services to customer requirements, and offers an extensive selection of software and peripherals. Information on Dell and its products can be obtained at www.dell.co.za.
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