Dell Computer on Friday raised its revenue and earnings forecasts for the fourth fiscal quarter, citing increased demand among consumers.
Austin, Texas-based Dell says it expects sales of $8 billion for the quarter ending Feb. 1, up from its previous projection of $7.6 billion. It raised its earnings per share forecast to 17 cents from 16 cents.
Analysts' consensus earnings estimate was 16 cents a share on revenue of $7.66 billion, according to Thomson Financial/First Call.
Dell's improved outlook comes during a week in which competitor Compaq Computer, another big player in the consumer PC market, announced better than expected revenue and earnings.
Wall Street analysts have said in recent weeks that they expect Dell to have benefited in the fourth quarter as consumers bought more computers than expected during the holiday season, which is typically the strongest time of year for PC makers.
Dell took over from Compaq as the No. 1 PC maker in 2001, during a period of weak demand for PCs from both companies and consumers and as it mounted an aggressive price war and marketing campaign. Compaq now plans to merge with Hewlett-Packard.
Dell says it expects fourth-quarter shipments to consumers to increase by 50 percent and sees revenues from its consumer business growing 40 percent from the third quarter. It also says it expects worldwide shipments in the fourth quarter to be up at a strong double-digit percentage rate.
The increase in unit shipments is likely to be accompanied by a decline in average selling prices, Lehman Brothers analyst Dan Niles said in a note prior to Dell's announcement.
He expects average selling prices to decline at a rate of 5 to 6 percent during the fourth quarter, compared with the third as consumer sales become a bigger portion of revenues. That trend will likely hurt first-quarter margins as well, he said.
Shares of Dell were down 24 cents at $28.71 in morning Nasdaq trade.
Dell is due to report earnings on Feb. 14.
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