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Dell Can't Get No Respect
washingtonpost.com Staff Writer
Friday, May 14, 2004; 9:33 AM
Dell Inc. executives are justifiably pleased about their first-quarter profit, but the PC maker's latest financial results are generating little more than middling enthusiasm from tech industry analysts. The numbers show a company that is holding its own against the various slings and arrows of the PC price wars, but at the same time is suffering from the high costs of doing business.
The American-Statesman also cited Dell President Kevin Rollins as saying that the company is "aggressively pursuing growth in overseas markets, in part because of lower tax rates that translate to after-tax profits comparable to those in the United States." Dell's revenues were up to $11.5 billion, a million above analysts' expectations, the Dallas Morning News reported, quoting spokesman Mike Maher as saying that the company crossed the bar with "price cuts, promotions and other traditional tactics." Both Texas newspapers pointed out that higher chip costs hurt the company, but the Morning News let Morningstar analyst Rod Bare wax optimistic: "Dell is certainly not in trouble ... They're really in the driver's seat."
And now to The Wall Street Journal for a recap of Dell's numbers: "The world's largest maker of personal computers said net income rose to $731 million, or 28 cents a share, for the quarter ended April 30, from $598 million, or 23 cents a share, a year earlier. Revenue climbed 21% to $11.54 billion from $9.53 billion." The Journal also wrote that the company was able to take advantage of a weak dollar against the euro to boost its foreign sales, and that sales to corporate clients rose to their highest rate in three years. But it's the chips, as we noted before, that are the real downer here. Rollins "attributed the margin decline to higher prices for memory chips along with stronger sales of lower-margin products. Mr. Rollins said that if memory prices had remained stable, Dell's higher revenue would have added a penny a share," The New York Times reported.
Schneider highlighted another important performer for Dell: printers. "Dell's printer business, launched 14 months ago under a manufacturing agreement with Lexmark International Inc., has been stronger than anticipated, with sales of more than 800,000 in the first quarter, Schneider said. Dell's inkjet printers have garnered about 10% of the U.S. market, and its all-in-one printers have gained about 17%, he said. ... A steady stream of replacement ink represents the profit in printers. One in four Dell printers are sold with an additional ink cartridge, Schneider said."
Where the Jobs Are
"Companies are staffing up because customers are buying hardware, software and consulting services again. Hewlett-Packard says in a survey out Friday that 44% of small and midsize firms will spend up to 10% more on tech this year than last year. An additional 17% will spend up to 20% more," USA Today also reported. Here's the other shoe dropping, courtesy of the same newspaper: "Tech hiring has a long way to recovery. Growth is uneven. Struggling Gateway and Sun Microsystems recently announced thousands of job cuts. Telecommunications firms are still hacking payrolls. 'We're not seeing a huge, huge uptick,' says Gary Beach, publisher of CIO magazine." Stay tuned for further ambivalence...
Dell at Home
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