Direct sales PC maker Dell Computer said it would meet
first quarter EPS projections of 16 cents per share despite “industry
softness and change” that has hurt its competitors.
With increased competition expected from the pending Hewlett Packard/Compaq
merger, the Texas-based Dell said lowered operating costs in areas of
product design, warranty expenses and call center management helped improve
its financial performance this quarter.
“We’ve stepped up our pursuit of internal cost reductions through
still-higher levels of quality and efficiency,” chief operating officer
Kevin Rollins said on the eve of an analysts conference to discuss the
company’s business.
The company, which generates about three-quarters of its sales from desktop
and notebook PCs, echoed earlier projections that it would earn 16 cents per
share despite projections of a slight decline in revenues. Dell said sales
would reach $8 billion, a 2 percent decline over the same year-ago period.
Dell said the 2 percent revenue drop was lower than previous targets of
between 3 percent and 5 percent.
The news came on the heels on Wednesday’s announcement that Dell plans to
get into the server blade business, a niche that is all the rage in the hardware server
sector these days. The company also sells enterprise products
that include network servers, workstations, and storage systems.
Last February, the company cut about 1,700 jobs to ride out the storm in the
PC sales sector and, in a statement Thursday, Dell said those cutbacks and
other operating advantages helped score major customer wins.
Rollins, who led Thursday’s conference call along with CEO Michael Dell and
CFO James Schneider, said the company has used broad, fundamental operating
advantages to “profitably win and deliver value to customers in the midst of
industry softness and change.”
“Component costs fell at an unprecedented rate last year, and we gained
significant new business from passing those declines to customers more
rapidly than anyone. Supply costs have flattened somewhat, but our
competitive advantage has not,” Rollins added.
