Dell Profit Surges, Sees Record 3Q Sales

Dell said Thursday that it earned $846 million, or 33 cents a share, compared with $677 million, or 26 cents a share, a year earlier. That matched its own forecast from August as well as Wall Street expectations.

Revenue rose 18 percent to $12.5 billion for the three months ended Oct. 29, up from $10.6 billion a year earlier.

Citing its direct-sales model, Round Rock, Texas-based Dell said it was on track to become a $60 billion company sometime in 2006, roughly a year ahead of schedule.

"Our confidence in hitting some pretty good numbers is increasing," Dell chief executive Kevin B. Rollins said. "We're ahead of plan. The growth rates appear to be achievable."

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For the third quarter, Dell saw 27 percent growth in Europe, the Middle East and Africa. The Asia Pacific region and Japan grew by 25 percent. Dell said it was helped in the United States by a 20 percent increase in spending by business customers.

Rollins said fourth-quarter shipments would be about 20 percent higher than a year ago. He predicted fourth quarter earnings of 36 cents per share, an increase of 24 percent, on revenue of about $13.5 billion, up 17 percent.

"They seem as strong as ever," said Tim Bajarin, analyst at Creative Strategies. "Dell's business model still is the most effective when it comes to selling PCs to the customer."

Rollins was particularly pleased with Dell's printer business, which is on track to sell more than 5 million printers this year, calling it "the most successful of any startup business we've ever had at Dell."

Dell spent $1.3 billion to buy back 38 million shares of its own stock in the quarter, bringing the total amount of repurchased stock to $3.3 billion this year.

Dell has about 13 percent of the global computer market and employs about 53,000. The company had $41 billion in revenue last year.

Dell added 3,000 workers in the quarter, which Rollins attributed to new call center hires working directly for Dell instead of being outsourced.

Earlier this week, Dell announced plans to build its third U.S. manufacturing plant in North Carolina, employing at least 1,500 people within five years. Dell already has plants in Tennessee and Texas.

In the past several years, Dell has increasingly pushed into consumer electronics, recently launching a revamped line of tiny digital music players and large plasma screen televisions.

Rollins, however, said Dell's consumer business still accounts for just 15 percent of the company's revenue.

Most of Dell's business remains centered on the sale of large computer servers to corporations and other areas like technology services.

"We believe in the advent of the digital home and the opportunity to combine more products in the home, but consumer is not our number one focus," he said. "It's the enterprise."

In the first nine months of its fiscal year, Dell earned $2.38 billion, or 92 cents per share, compared to $1.90 billion, 72 cents per share, in the same period last year. Revenue rose 19.4 percent, to $35.75 billion from $29.93 billion.

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