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RealTime IT News

PC Sales Pick up Dell's Spirits

Dell Thursday said boisterous sales of its PCs, servers and storage units helped it boost the company's overall global market-share and give it a good quarterly financial report card.

"I will certainly tell you that there is increased optimism among CEOs and large companies, but I don't really want to characterize it too strongly," CEO Michael Dell said during a conference call with analysts and reporters. "It's sort of incrementally improving."

The Round Rock, Texas-based computer maker managed to match Wall Street expectations record $9.8 billion in second-quarter revenue, up 16 percent from the same period one year ago. Per-share earnings were 24 cents, an increase of 26 percent. Dell has now managed to match consensus earnings estimates for the past four consecutive quarters.

The company said its second-quarter growth even earned it nearly three points of additional global market share -- close to 18 percent -- giving the company better momentum than its chief rivals IBM and Hewlett-Packard . Dell runs neck-and-neck with HP for the title of top overall PC vendor.

"We've again shown Dell's unique ability to profitably earn a larger share of business by focusing on standards-based technologies, managing costs and creating value for customers," Dell CFO Kevin Rollins said in a statement. "We've done that regardless of the pace of industry demand and the appetite of others to generate sales, even at a loss."

According to market analysts, Dell's numbers could indicate the start of the long-awaited recovery in the PC industry.

Gartner Dataquest Thursday projected worldwide PC shipments would grow at a rate of 9.6 percent in the third quarter, with unit shipments now expected to reach 39.8 million. Previously, analysts projected an 8 percent increase. For the full year, Gartner is forecasting PC shipments to grow 8.9 percent to reach 161.3 million units.

Dell said evidence of the recovery is reflected in its total product shipments for the quarter, which is up 27 percent from one year ago. Regionally, the company said its shipments increased 46 percent in Asia-Pacific and Japan and 31 percent in Europe, the Middle East and Africa.

In the United States, Dell said shipments increased 47 percent -- 70 percent for notebook computers from the company's Inspiron line. Growth in systems sold to small and medium businesses was up 30 percent. Company volumes in the Americas region outside of the U.S. rose 30 percent, highlighted by a 73-percent gain in Mexico.

In Asia-Pacific and Japan, Dell said shipments of its PowerEdge servers were up 40 percent.

Analysts with Schaeffers Research say Dell is at a "critical juncture" commenting that the company's stock has recently settled lower beneath its 10-day and 20-day moving averages.

However, Dell said its growth trend does not show signs of wearing down. In the next three months, Dell said it anticipates shipments to rise more than 25 percent and a 15 percent bump in its revenues hovering at the $10.5 billion level with earnings of 26 cents per share to boot.

Also beginning with its third quarter, the company said it would begin consolidating operations of Dell Financial Services, the company's U.S. joint venture with CIT Group Inc. The move was predicated by new government accounting standards.