Dell Computer tiptoed past analysts' reduced estimates in its fourth quarter last Thursday, earning $436m (£270m), or 16 cents (9p) a share on sales of $6.8bn (£4.2bn). First Call consensus lowered its profit estimate from 21 cents (13p) a share to 15 cents (9p) last month after Dell warned that its Q4 earnings would fall short of expectations. Dell shares closed up 3 15/64 to 38 51/64 ahead of the earnings report.
At the time, Dell said an "inconsistent" flow of key semiconductor components, and a slower than expected rebound in sales to corporate and institutional customers due to the Y2K rollover, was responsible for the shortfall. The $6.8bn (£4.2bn) in sales marks a 31 percent improvement from the same quarter in 1998, when it earned $425m (£263m), or 15 cents (9p) a share, on sales of $5.2bn (£3.4bn). For the fiscal year, the PC maker earned $1.9bn (£1.2bn), or 68 cents (40p) a share on sales of $25.3bn (£15.6bn), which was up from a profit of $1.5bn (£0.9bn), or 53 cents (32p) a share, on sales of $18.2bn (£11.3bn) in fiscal 1998.
"Customers are increasingly demanding the type of direct relationship we pioneered in this industry, and the Internet is enhancing that preference," said Dell CEO Michael Dell. "They're insisting on the efficiency and value of our direct Internet business model, and we believe we're widening our fundamental competitive advantage in the process." In the quarter, Dell averaged $40m (£24.8m) a day in sales from its Web site, accounting for roughly 50 percent of the company's total sales.
Dell's worldwide services sales jumped to more than $490m (£303m), up 50 percent from the same quarter in the previous year. Sales of software and other peripherals improved by 32 percent to $610m (£378m) in the quarter. Non-system sales accounted for 16 percent of total sales. Total PC shipments jumped 36 percent from the same quarter in the previous year and 50 percent for the fiscal year. By region, Dell's sales improved eight percent in Europe, while sales into the Asia-Pacific and Japanese markets improved 56 percent. Sales into China, now Dell's eighth largest market, more than doubled. Sales of its workstations, storage products and servers jumped 55 percent in the quarter, with Dell's server sales representing 40 percent of its worldwide growth. Notebook computers made up 28 percent of Dell's total systems revenue in the quarter, up from 23 percent in the year-ago quarter.
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