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 user 2005-05-16 at 10:08:00 am Views: 40
  • #9388
    Dell shares surge as profit
    jumps 28%

    Dell  shares rose more than 7% Friday after the world’s
    largest direct-sale computer vendor reported a 28% rise in first-quarter
    earnings and forecast higher revenue growth for the second quarter.

    The No. 1 PC maker declared Thursday that its giant size
    isn’t going to stop it from getting bigger.

    The PC behemoth reported revenue of $13.4 billion for its
    fiscal first quarter, ended April 29. That’s a 16.5% jump from $11.5 billion a
    year ago.

    The gains came across the board: Dell appears to be taking
    share from rivals in established markets. It is expanding into new markets. And
    it is getting a boost from new products, such as computer storage systems and

    “It’s very impressive,” says equity analyst Brent Bracelin
    at Pacific Crest Securities. “They hired 2,400 people in the quarter. They’re
    definitely feeling bullish.”

    Dell, like fellow tech giant Cisco Systems, is trying to
    prove that its glory days of growth are not over. Dell already makes about one
    in three PCs sold in the USA. So it is turning to:

    New markets. Sales outside the USA jumped 21%
    during the quarter from a year ago. Sales in Canada and Latin America rose

    New products. Revenue in Dell’s peripheral
    division, which includes printers and television sets, rose 29% from a year

    Dell also is optimistic about the economy, although CEO
    Kevin Rollins said that the corporate PC market “is trailing off a little bit.”
    IBM reported similar weakness in its first quarter, sparking fears of a

    Rollins said strong sales in April more than made up for a
    slow start to the quarter. The economy “is not quite as robust as last year but
    is still very, very healthy,” he said.

    Rollins also squashed fears that Dell has been gaining
    share by slashing prices deep enough to cut into profit. Instead, Dell reported
    net income of $934 million, or 37 cents a share, up from $731 million, or 28
    cents a share, a year ago.

    In the current quarter, Dell expects revenue of $13.6
    billion to $13.8 billion and earnings per share of 37 to 39 cents.

    That may help relieve some of the pressure on Dell’s stock,
    which has fallen about 13% this year. Dell shares rose $2.72 to close Friday at