17 May 2002 PC market leader Dell Computer has reported first quarter results ahead of estimates and says the outlook for its current quarter is equally promising.
Dell reported a slight increase in revenue to $8.07 billion (€8.82bn) for its first fiscal quarter of 2003, compared with $8.03 billion (€8.78bn) in the same quarter in fiscal 2002. Net income was flat on the year-ago quarter, at $457 million (€500m). Earlier this year, Dell had predicted revenue would decline between 3% and 5% during the first quarter.
Dell expects to sustain this momentum during its current quarter. President Kevin Rollins said second-quarter profit would likely be $495 million (€541m), while sales for the second quarter will rise 8% compared with the same quarter in 2002.
Dell’s improved outlook is unusual in the current climate. Earlier this week, rivals Hewlett-Packard and IBM both delivered highly pessimistic forecasts for the coming quarters, saying they did not anticipate a recovery in hardware spending until 2003 at the earliest. Both reported double-digit declines in sales.
Intense cost-cutting has helped Dell outperform its rivals. The company has laid off 3,500 employees during the past year, and has pushed operating costs down to 9.9% of revenue, compared with 10.7% in the year-ago quarter. Dell plans to reduce total overheads by $1 billion (€1.09bn) by the end of the 2003 fiscal year.
Industry analysts agreed that the results were not reflective of the broader PC market. Ashok Kumar, an analyst at investment bank US Bancorp Piper Jaffray, said the reason for Dell’s improved performance was that it had managed to claw market share away from competitors such as HP. Andrew Neff of investment bank Bear Stearns, meanwhile, said that the company’s low-cost model was the key factor in its success.