Dell Calls Fiscal Q4 'Best Operating Period Ever'

By Jeff Malester On Feb 23 2004 - 8:00am

Buoyed by a swing to increasing sales of the more profitable enterprise categories of server computers and software and peripheral products, in addition to notebook computers, Dell posted an increase in both overall revenue and earnings during its fiscal fourth quarter.

Calling the past three months, its "best operating period ever," Dell increased fourth quarter revenue by 18.2 percent, hitting $11.5 billion, up from $9.7 billion in the year-ago period.

Operating income jumped 19.7 percent in the fourth quarter, ended Jan. 30, reaching $981 million, compared with $819 million in the same three months the previous year.

Net income soared 24.2 percent, to $749 million, up from $603 million in the fiscal fourth quarter a year ago. Gross margin held firm in the year's final quarter, edging downward to 18.2 percent, from 18.3 percent in the fourth quarter of 2002.

"Business is growing," CEO Michael Dell said in a conference call. "We're seeing a lot of increased demand from customers to refresh their older base of products."

Dell continued to increase its enterprise product share of total revenue, with this number rising to 21 percent in the fourth quarter, compared with 19 percent year-on-year. The desktop category share of revenue decreased to 52 percent in the fourth quarter, down from 55 percent the previous year, while notebooks moved from a 26 percent share, to 27 percent in the same time frame.

"Much of the industry's quarterly growth was the low ends of the desktop and notebook categories, which offer little if any profitability," said Kevin Rollins, president and chief operating officer. "Dell met its operating targets by pursuing profitable growth."

Shipments of servers increased 40 percent in the fourth quarter year-on-year, notebooks 40 percent and desktops 21 percent, said Dell. Storage revenue moved up 47 percent.