News Bits: Dell profit jumped 52% in 4th quarter

Revenue hit a record, but shares fell as the PC-maker said sales would not meet analysts' forecasts.
[size='-2'] By David Koenig
Associated Press[/SIZE]

DALLAS - Dell Inc. said yesterday that net income rose 52 percent as the world's largest personal-computer-maker was helped by an extra week in its fourth quarter and by strong sales to businesses and international customers.

The company also trimmed its outlook, and shares slipped in late trading.

Dell earned $1.01 billion, or 43 cents a share, in the quarter ended Feb. 3, compared with $667 million, or 26 cents a share, a year earlier.

Analysts had expected the PC-maker to earn 41 cents a share in the most recent quarter, according to a survey by Thomson Financial.

Revenue rose 13 percent to a record $15.18 billion, exceeding the $14.82 billion forecast of analysts. Sales outside the United States increased 21 percent, compared with 10 percent in the U.S. market.

Dell, of Round Rock, Texas, said first-quarter earnings would be 39 to 41 cents a share excluding a cost of 3 cents a share for stock compensation. Analysts had forecast 42 cents a share.

The company, however, said first-quarter sales would be $14.2 billion to $14.6 billion, slightly below analysts' prediction of $14.73 billion. Chief executive officer Kevin Rollins said it was just a typical post-holiday slowdown in the technology sector.

"We are not seeing anything fundamentally that's slowing the market down," Rollins said. "We just think... with the normal seasonality changes and the size of our company, this is a good forecast for the market."

Dell's forecast would call for a first-quarter sales gain of 6 percent to 9 percent over early 2005, below the company's pattern of double-digit increases.

Increasingly, Dell's growth is coming from outside the United States, mostly in Asia and Europe. Dell executives say that trend is likely to continue because the company has more room to grow overseas - its share of the U.S. PC market is about 30 percent but only about 10 percent in Asia and Europe.

The international strategy is likely to create more jobs overseas as Dell builds factories close to its new customers.

"Asia jobs will grow faster than U.S. jobs," Rollins said.

Yesterday's report followed two previous disappointing quarters from Dell, which was hurt by slowing sales growth and profit-sapping restructuring charges. Analysts say the company faces several challenges, including falling PC prices.

Dell often initiated those price cuts, but it thrived because of its ability to squeeze costs out of vendors and undercut rivals such as Hewlett-Packard Co. and International Business Machines Corp.

In trading yesterday afternoon before release of the fourth-quarter results, Dell shares rose 19 cents, to $31.96, on the Nasdaq. They were down 28 cents in after-hours trading. Dell stock has traded between $28.62 and $41.99 over the last year.