subject: Dell shares jump after profit triples [print this page] Dell shares jump after profit triples Dell shares jump after profit triples
DELL'S fourth-quarter earnings nearly tripled as the computer maker reported strong demand from corporate customers and lower component prices that pushed up the company's gross margin.
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The company has benefited from increased spending by corporate clients as they begin to replace aging computers and servers following cutbacks during the recession. It's a trend that chief financial officer Brian Gladden said will likely continue for the next two to three years.
"These types of corporate transitions take a while," he said.
Corporate business customers represent more of Dell's revenue than peers Hewlett-Packard and Acer.
Dell also is seeing the fruits of reorganising its supply chain and trimming its product line in recent years. The result has been that the company's higher-margin business-focused operations have grown profits.
"This quarter's results really speak to the momentum we feel in the business, and we're confident on the sustainability of this performance," Mr Gladden said.
Dell's gross margin jumped to 21 per cent from 16.6 per cent, its highest total in several years. Excluding certain costs, the company's gross margin was 21.5 per cent.
Dell projects revenue to rise 5 per cent to 9 per cent for the new financial year -- Wall Street predicted a 5 per cent increase to $US64.4 billion.
The company said it expected normal seasonal declines in its consumer and public businesses during the first quarter and, as such, a "slight sequential decline in revenue".
Dell shares jumped 5.3 per cent to $US14.65 in after-hours trading.
For the quarter ended January 28, Dell reported a profit of $US927 million, or US48 cents a share, up from $US334m, or US17c a share, a year earlier. Excluding acquisition-related charges and other impacts, adjusted per-share earnings grew to US53c from US28c. Analysts surveyed by Thomson Reuters expected a profit of US37c.
Revenue climbed 5.3 per cent to $US15.69bn. In November, the company projected revenue was expected to track "in line to slightly up" from the third quarter's $US15.39bn, a view that missed analysts' then expectations.
Even the company's struggling consumer business was able to eke out an operating profit of more than 2 per cent as customers purchased more of the company's performance-focused laptops, something Dell executives highlighted on the company's conference call with analysts.
"We're counting on the consumer business to deliver and improve margins," Mr Gladden said.
Revenue from desktop personal computers increased 4 per cent, while the larger mobility segment -- mostly notebook computers but also other mobile devices -- rose 4.2 per cent.
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Revenue from the large enterprise customer segment, as well as from small and medium businesses, each rose 12 per cent. Revenue from public customers increased 4 per cent but fell 8 per cent for the consumer segment, which benefited from a strong Windows 7 launch last year.
