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Sales of storage systems, mobility products, enhanced services and software and peripherals helped the computer maker augment earnings from its PC business in the second quarter, the company said on Thursday.
In the three months ended July 31, Dell had earnings of $1.02 billion, or 41 cents per share, up 32 percent from a year ago. Revenue for the quarter was $13.4 billion, 15 percent higher than in the same period last year.
Analysts polled by Thomson First Call predicted that the No. 1 U.S. computer maker would post earnings of 38 cents per share on sales of $13.71 billion. At the same time last year, Dell announced earnings of 31 cents per share on sales of $11.71 billion.
PCs, which Dell started selling 10 years ago, are the company's bread and butter. PC shipments have been growing incrementally, but prices have been falling steadily over the year. Dell has been at the forefront of online fire sales, where customers can order desktop computers without a monitor for less than $300.
Despite the second quarter's increase in PC sales, Kevin Rollins, Dell's chief executive officer, was cautious.
"While average selling prices were down more than we would have liked, we focused on balanced profitability and, in the process, delivered to our guidance for EPS (earnings per share)," Rollins said in a statement.
Last month, Rollins said Dell has the potential to be an $80 billion company in the next three to four years.
The pricing wars are a double-edged sword for Dell, which has to keep pressure on the next two biggest PC makers. No. 2 PC seller HP reports quarterly earnings next week. No. 3 player and IBM PC division beneficiary Lenovo reported profit of $45.9 million Wednesday.
Still, Dell said it managed to ship 9.1 million computer systems, including 2.7 million portable computer products (such as laptops and its Axim PDAs) in the second quarter. The company said it also made more than $2 billion from its software and peripheral products such as printers and displays.
Though Dell enjoys great success in the United States, the company ranks second behind Hewlett-Packard in overseas sales. Dell currently averages $135.2 million in revenues per day, Rollins said last month.
Now, the CEO also said he expects about 55 percent of Dell's growth in the next four years to come from outside the Americas.
As for the next three months, Rollins said corporate customers, the back-to-school buying season and continued growth in markets outside of the United States will drive Dell's third-quarter business.
The company is preparing to launch a new line of high-end computers, displays and televisions to appeal to customers in need of that luxury computing experience.
The company expects its revenue in the third quarter to hit somewhere between $14.1 and $14.5 billion and predicts earnings per share of 39 to 41 cents. Dell also announced plans to repurchase at least $1.2 billion in stock during the current fiscal quarter. Dell's shares closed at $39.58, down 15 cents.
See more CNET content tagged:
Kevin Rollins, earnings, portable computer, computer company, Dell
Major gauges fall on the combination of PC maker's
disappointing outlook and record crude prices.
August 12, 2005: 5:41 PM EDT
By Alexandra Twin, CNN/Money staff writer
NEW YORK (CNN/Money) - Stocks slipped Friday, with investors
bailing out of a variety of shares amid Dell's disappointing
revenue outlook and a fresh spike in oil prices.
The Dow Jones industrial average (down 85.58 to 10,600.31,
Charts) and the Nasdaq composite (down 17.65 to 2,156.90,
Charts) both lost 0.8 percent, while the Standard & Poor's 500
(down 7.42 to 1,230.39, Charts) index lost 0.6 percent.
For the week, the Dow and S&P 500 ended higher, while the
Nasdaq slipped for the second week in a row.
"$67 a barrel oil is not exactly helping things," said Art Hogan,
chief market analyst at Jefferies & Co. "Pair that with Dell, which
is dragging on techs, and you see this kind of selloff."
Dell reported second-quarter earnings late Thursday that rose
from a year earlier and met estimates on revenue that rose from
a year ago but missed estimates.
The personal computer maker also forecast slower revenue
growth in the current quarter, due to weakness in select U.S.
segments. Dell (down $2.94 to $36.64, Research) shares
slumped 7.4 percent Friday and topped the Nasdaq's most-
actives list.
For some time, the rise in oil prices has been absorbed by the
market, but hasn't had a big impact on investor sentiment. That
may be changing, as evidenced by Friday's stock reaction.
"We hear from all these people that the rise in oil is just rampant
speculation, that it's all going to correct," said Paul Levine,
president at money manager Lifetime Financial Strategies. "But I
don't think that's the case. Worldwide demand versus supply
suggests that prices are going to keep rising."
And that's likely to keep unsettling investors, he added.
What moved?
A variety of tech stocks declined in response to Dell, with the
market already sensitive to signs of slower earnings growth
following Cisco Systems' outlook earlier in the week.
nVidia (up $1.70 to $29.95, Research), the graphics chipmaker,
rose 6 percent after it reported second-quarter earnings that
rose from a year ago and topped estimates.
In addition, Apple Computer (up $2.10 to $46.10, Research)
actually benefited from Dell's weak outlook, analysts said, with
some fund managers switching money out of Dell and into
Apple. Shares of the iPod and PC-maker rose 4.8 percent and
closed at an all-time high.
LS: Is it just me, but with Big Oil in the White House, plus George
Bush + Dell from Texas Big Oil Country & Citizen Gates lining
the Government's pockets, why should we be surprised that this
is such a "cluster" ???
Major gauges fall on the combination of PC maker's
disappointing outlook and record crude prices.
August 12, 2005: 5:41 PM EDT
By Alexandra Twin, CNN/Money staff writer
NEW YORK (CNN/Money) - Stocks slipped Friday, with investors
bailing out of a variety of shares amid Dell's disappointing
revenue outlook and a fresh spike in oil prices.
The Dow Jones industrial average (down 85.58 to 10,600.31,
Charts) and the Nasdaq composite (down 17.65 to 2,156.90,
Charts) both lost 0.8 percent, while the Standard & Poor's 500
(down 7.42 to 1,230.39, Charts) index lost 0.6 percent.
For the week, the Dow and S&P 500 ended higher, while the
Nasdaq slipped for the second week in a row.
"$67 a barrel oil is not exactly helping things," said Art Hogan,
chief market analyst at Jefferies & Co. "Pair that with Dell, which
is dragging on techs, and you see this kind of selloff."
Dell reported second-quarter earnings late Thursday that rose
from a year earlier and met estimates on revenue that rose from
a year ago but missed estimates.
The personal computer maker also forecast slower revenue
growth in the current quarter, due to weakness in select U.S.
segments. Dell (down $2.94 to $36.64, Research) shares
slumped 7.4 percent Friday and topped the Nasdaq's most-
actives list.
For some time, the rise in oil prices has been absorbed by the
market, but hasn't had a big impact on investor sentiment. That
may be changing, as evidenced by Friday's stock reaction.
"We hear from all these people that the rise in oil is just rampant
speculation, that it's all going to correct," said Paul Levine,
president at money manager Lifetime Financial Strategies. "But I
don't think that's the case. Worldwide demand versus supply
suggests that prices are going to keep rising."
And that's likely to keep unsettling investors, he added.
What moved?
A variety of tech stocks declined in response to Dell, with the
market already sensitive to signs of slower earnings growth
following Cisco Systems' outlook earlier in the week.
nVidia (up $1.70 to $29.95, Research), the graphics chipmaker,
rose 6 percent after it reported second-quarter earnings that
rose from a year ago and topped estimates.
In addition, Apple Computer (up $2.10 to $46.10, Research)
actually benefited from Dell's weak outlook, analysts said, with
some fund managers switching money out of Dell and into
Apple. Shares of the iPod and PC-maker rose 4.8 percent and
closed at an all-time high.
LS: Is it just me, but with Big Oil in the White House, plus George
Bush + Dell from Texas Big Oil Country & Citizen Gates lining
the Government's pockets, why should we be surprised that this
is such a "cluster" ???
from IDG NEWS ( instead of Dell's PR Dept. C/NOT):
Study: Dell customer rating plunges, Apple leads pack
IDG News Service 8/16/05
Tom Krazit, IDG News Service, San Francisco Bureau
U.S. consumers lambasted Dell Inc. for poor customer service in
a survey conducted last quarter, sending the world's largest PC
vendor into a virtual tie with the rest of the PC market behind
the industry-leading efforts of Apple Computer Inc.
Component costs rising, but PC prices won't
Pirated version of MacOS for x86 available for install
HP preparing the next wave of wireless iPaqs
Mutual Fund Transfer Agency Technology: Migrating from
Mainframes
Are Blade Servers too Hot to Handle? Strategies for Optimal
Network-critical Physical Infrastructure
Blade Servers: The Case Is Simple
Blade servers from HP ? consolidation and affordability
ITworld.com Today. Sign up Now!
ITworld.com Product Spotlight. Sign up Now!
For the second year in a row, Apple received the best rating from
PC buyers in the American Customer Satisfaction Index (ACSI),
said David Van Amburg, general manager of the ACSI. The
University of Michigan compiles the ACSI in numerous product
categories by randomly calling U.S. residents and surveying their
buying habits, he said.
Apple received a score of 81, compared to an industry average
score of 74, in results released Tuesday. The Cupertino,
California, company's focus on product innovation and customer
service has won it a cadre of famously loyal customers unlike
any other PC vendor, Van Amburg said. Apple also received a
score of 81 in 2004.
Dell, on the other hand, earned a score of 74, down from a score
of 79 the previous year. Survey respondents complained mostly
about the quality of Dell's customer service, not its products,
Van Amburg said. The ACSI doesn't ask specific questions about
the type of problems customers are having with a company, but
customers were clearly more frustrated with the Round Rock,
Texas, company than last year, he said.
A few recurring complaints were the length of time on hold with
Dell customer-service representatives, as well as the quality of
the help customers eventually received, Van Amburg said. Dell
has started to expand its lead over Hewlett-Packard Co. (HP) in
PC shipments, and sometimes when market leaders increase
their product shipments they fail to increase service capabilities
at the same rate, he said.
Dell announced plans to open two new customer service centers
last week, but company Chief Executive Officer Kevin Rollins
denied that Dell was having customer service problems.
The ASCI tracks HP's customer satisfaction in two categories,
partly because HP's U.S. consumer PC business is divided
between two different product lines and partly to provide
historical comparisons for the performance of the products
before HP acquired Compaq in 2002. HP-branded products
received a score of 73, while Compaq-branded products were
rated the lowest of any vendor with a score of 67.
The HP-branded products have now regained the customer
satisfaction score they posted before the merger, while the
Compaq products have continued to languish well below the rest
of the industry, Van Amburg said. HP is looking into its two-
brand strategy as it searches for opportunities to cut costs under
Chief Executive Officer Mark Hurd, and some analysts believe it
might be time to cut the Compaq PCs from its lineup.
Gateway Inc. posted the largest increase in customer satisfaction
last year after its acquisition of eMachines, but slipped a bit
from 74 to 72 this year. However, that difference is within the
survey's margin of error of three points, Van Amburg said.
Overall customer satisfaction with the PC industry remains well
below the scores received by other consumer-product industries
such as household appliances and automobiles. Despite all the
work the PC industry has done to try to make their products
easier to use, customers are still frustrated by PC technology,
Van Amburg said.
The index measures the buyer's satisfaction with the last PC they
purchased, which allows the ACSI to obtain the freshest
experience, Van Amburg said. It surveyed 250 customers per
company.
Tom Krazit is U.S. correspondent for the IDG News Service.
- Dell's Customer Service Rating Plummets (IDG News)
- by Llib Setag August 17, 2005 11:38 AM PDT
- LS: Read the truth about Dell's great success at customer service
- Reply to this comment
-
(4 Comments)from IDG NEWS ( instead of Dell's PR Dept. C/NOT):
Study: Dell customer rating plunges, Apple leads pack
IDG News Service 8/16/05
Tom Krazit, IDG News Service, San Francisco Bureau
U.S. consumers lambasted Dell Inc. for poor customer service in
a survey conducted last quarter, sending the world's largest PC
vendor into a virtual tie with the rest of the PC market behind
the industry-leading efforts of Apple Computer Inc.
Component costs rising, but PC prices won't
Pirated version of MacOS for x86 available for install
HP preparing the next wave of wireless iPaqs
Mutual Fund Transfer Agency Technology: Migrating from
Mainframes
Are Blade Servers too Hot to Handle? Strategies for Optimal
Network-critical Physical Infrastructure
Blade Servers: The Case Is Simple
Blade servers from HP ? consolidation and affordability
ITworld.com Today. Sign up Now!
ITworld.com Product Spotlight. Sign up Now!
For the second year in a row, Apple received the best rating from
PC buyers in the American Customer Satisfaction Index (ACSI),
said David Van Amburg, general manager of the ACSI. The
University of Michigan compiles the ACSI in numerous product
categories by randomly calling U.S. residents and surveying their
buying habits, he said.
Apple received a score of 81, compared to an industry average
score of 74, in results released Tuesday. The Cupertino,
California, company's focus on product innovation and customer
service has won it a cadre of famously loyal customers unlike
any other PC vendor, Van Amburg said. Apple also received a
score of 81 in 2004.
Dell, on the other hand, earned a score of 74, down from a score
of 79 the previous year. Survey respondents complained mostly
about the quality of Dell's customer service, not its products,
Van Amburg said. The ACSI doesn't ask specific questions about
the type of problems customers are having with a company, but
customers were clearly more frustrated with the Round Rock,
Texas, company than last year, he said.
A few recurring complaints were the length of time on hold with
Dell customer-service representatives, as well as the quality of
the help customers eventually received, Van Amburg said. Dell
has started to expand its lead over Hewlett-Packard Co. (HP) in
PC shipments, and sometimes when market leaders increase
their product shipments they fail to increase service capabilities
at the same rate, he said.
Dell announced plans to open two new customer service centers
last week, but company Chief Executive Officer Kevin Rollins
denied that Dell was having customer service problems.
The ASCI tracks HP's customer satisfaction in two categories,
partly because HP's U.S. consumer PC business is divided
between two different product lines and partly to provide
historical comparisons for the performance of the products
before HP acquired Compaq in 2002. HP-branded products
received a score of 73, while Compaq-branded products were
rated the lowest of any vendor with a score of 67.
The HP-branded products have now regained the customer
satisfaction score they posted before the merger, while the
Compaq products have continued to languish well below the rest
of the industry, Van Amburg said. HP is looking into its two-
brand strategy as it searches for opportunities to cut costs under
Chief Executive Officer Mark Hurd, and some analysts believe it
might be time to cut the Compaq PCs from its lineup.
Gateway Inc. posted the largest increase in customer satisfaction
last year after its acquisition of eMachines, but slipped a bit
from 74 to 72 this year. However, that difference is within the
survey's margin of error of three points, Van Amburg said.
Overall customer satisfaction with the PC industry remains well
below the scores received by other consumer-product industries
such as household appliances and automobiles. Despite all the
work the PC industry has done to try to make their products
easier to use, customers are still frustrated by PC technology,
Van Amburg said.
The index measures the buyer's satisfaction with the last PC they
purchased, which allows the ACSI to obtain the freshest
experience, Van Amburg said. It surveyed 250 customers per
company.
Tom Krazit is U.S. correspondent for the IDG News Service.