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Dell reports $248 million profit

Boosted by strong sales of servers and workstations, Dell Computer posts better-than-expected third-quarter results.

Boosted by strong sales of servers and workstations, Dell Computer (DELL) today posted better-than-expected third-quarter results.

The direct seller of personal computers reported Dell at a glance net profits of $248 million, or 69 cents a share, compared with profits of $149 million, or 39 cents a share, a year ago.

Wall Street analysts had expected Dell to earn 65 cents a share for the quarter ended November 2. In trading before the earnings report, Dell's stock closed at 79-3/4, off 3-5/8 on the day.

Dell's revenues, meanwhile, rose 58 percent, to $3.2 billion, up from $2 billion a year ago.

Dell sales experienced strong growth in the United States, where revenues were up 63 percent, to nearly $2.3 million. Based on recent Dataquest figures, that makes Dell the No. 2 PC vendor in the United States. Worldwide, Dell maintained its No. 3 spot.

In Europe, Dell's quarterly revenues were $700 million, a 45 percent increase over last year. In the Asia-Pacific, including Japan, quarterly revenues were up 52 percent.

Dell's emphasis on higher-priced servers and workstations paid off during the quarter, with revenues up 340 percent from the previous year. The company's enterprise business now represents 10 percent of Dell's total systems revenues.

Laptop revenues grew 46 percent, and desktops 48 percent.

Dell's Web site proved to be a growing channel during the quarter, with sales exceeding $3 million a day--about $1 billion on an annualized basis.

Dell said revenues in the U.S. consumer market grew significantly faster than the overall company growth rate, but did not offer specifics.

Dell's inventory amounted to 11 days of sales, and gross margins increased slightly, from 22.2 percent in the second quarter to 22.5 percent in the current period. Operating expenses remained stable at 11.6 percent, while operating margins increased from 10.6 percent in the second quarter to 10.9 percent in the current quarter.

Chairman Michael Dell was upbeat about the company's future, saying demand remains strong while component prices are declining.