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Dell Q1 Revenue Rises 21%

5/17/2004 08:27:00 AM Eastern

Round Rock, Texas — Demand in the United States from consumers and small and medium businesses, as well as improved spending among large corporate customers, helped grow Dell fiscal first quarter revenue 21.1 percent, to $11.5 billion, from a year-ago $9.5 billion.

Shipments of Dell computer products in the United States increased 18 percent, with the company claiming the addition of two points to its leading market-share. Overall company product shipments jumped 25 percent in the three months, compared with the same quarter last year.

Operating income in the first quarter reached $966 million, a 19.1 percent rise over the $811 million registered year-on-year. The increase was reported despite higher-than-expected costs for computer memory in April.

Net earnings in the first three months, ended April 30, reached $731 million, up 22.3 percent from a year-earlier $598 million.

Gross margin for the quarter edged downward, to 18 percent, from 18.3 percent in the same three months a year ago, as rising costs and lower retail prices took their toll. The average price for products sold in the first quarter dropped $50, to $1,570, compared with the year-ago period. Expenses maintained a quarter-over-quarter rate of 8.6 percent.

Dell revenue in the Americas, slipped in the first quarter, with the region still holding the lion’s share of sales, as a percentage of total net revenue, at 65 percent, down from 68 percent in the year-ago period.

Both Europe and Asia Pacific/Japan increased their percentage of total net revenue in the first quarter, with Europe rising to 23 percent, from 21 percent, and the Pacific increasing to 12 percent, from 11 percent. The weak dollar helped Dell boost overseas shares, while revenue jumped by 29 percent in the first quarter.

Although Dell continues to primarily be a PC-driven operation, desktop percentage of total net revenue dropped from 53 percent, to 51 percent, in the first quarter, while notebooks increased from 27 percent, to 28 percent, and servers climbed from 20 percent, to 21 percent.

Dell reported strong demand in its youthful printer business, and plans to introduce several new models in the United States in the next few weeks. Revenue from the company’s software and peripheral products area, which includes printers, increased 39 percent in the quarter.

Dell, which said its initial U.S. market-share growth in printers in more rapid than in any new product category in its history, reported, that in just one year, inkjet printer share has climbed to 10 percent, and to the upper teens for all-in-one printers. It said it shipped 800,000 units in the first quarter, compared with 2 million shipped all last year.

Looking ahead to its second fiscal quarter, Dell expects year-over-year growth in product shipments of 24 percent. Product revenue is anticipated at about $11.7 billion, a 20 percent increase year-on-year.

Dell is planning to spend $700 million in its second quarter to repurchase common stock shares. The company spent $1.1 billion in repurchases during the first quarter, up from a planned $600 million at the start of the period.

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