Dell faces up to slowing growth

15 February 2002 PC and server vendor Dell has posted a mixed set of financial results for the fourth quarter and full year to the end of January 2002.

While revenues fell in the fourth quarter compared to the same period a year earlier, sales rose compared to the previous quarter.

In the quarter to the end of January, Dell posted revenues of $8.06 billion (€9.26bn), down 7% from the $8.67 billion (€9.96bn) achieved in the same period in fiscal 2001. However, sales were up 7.9% compared to the third quarter, a factor Dell attributed to higher than forecast sales to the home sector over the Christmas period.

For the full year, the company reported revenues down 2.3% to $31.17 billion (€35.8bn), compared to the $31.89 billion (€36.62bn) achieved in fiscal 2001. However, net income rose $1.78 billion (€2.04bn) as cost-cutting measures taken this time last year fed through.

According to Eric Rothdeutsch, an analyst at investment bank Robertson Stephens, Dell will achieve revenue growth of just 4.8% in the current fiscal year, to the end of January 2003, and 6.6% in fiscal 2004, when revenues are forecast at $34.82 billion (€39.99bn).

That compares poorly to the halcyon days of the 1990s when it regularly clocked-up quarterly growth rates of 40% or 50%.

However, its growth rate in this period may be affected by a number of factors. These include the potential fall-out from the merger between Hewlett-Packard and Compaq; the financial difficulties of competitors such as Gateway; the bankruptcies of second-tier vendors such as Tiny in the UK; and the reduction in commitment to PC manufacturing by major rivals such as IBM.

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Ben Rossi

Ben was Vitesse Media's editorial director, leading content creation and editorial strategy across all Vitesse products, including its market-leading B2B and consumer magazines, websites, research and...

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