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Dell beats estimates by a penny

The PC maker's fourth-quarter revenue rises 18 percent, compared with a year earlier, as it continues to increase its product shipments.

Dell on Thursday said its fourth-quarter revenue rose 18 percent on an increase in product shipments, beating analysts' estimates by a penny.

The Round Rock, Texas, PC maker reported a net income of $749 million, or 29 cents per share, in the quarter ended Jan. 30. That's up from $603 million, or 23 cents per share, a year earlier. Revenue increased to $11.5 billion, compared with $9.7 billion a year ago.

On average, analysts expected Dell to post a profit of 28 cents per share on revenue of $11.5 billion, according to a survey by Thompson First Call.

Dell said the quarter was its best so far, setting company records in unit shipments, revenue, net income and earnings per share.

"Dell is alone in simultaneously providing customers great value, growing faster than the industry and earning a compelling profit for investors," Kevin Rollins, Dell's president, said in a statement.

Dell increased its shipments more than 20 percent in the Americas and more than 30 percent in Europe, the Middle East, Africa, Japan and the Asia-Pacific region, the company said.

The company increased shipments of servers by 40 percent. Shipments of desktop PCs increased 21 percent, and notebooks increased 40 percent. Dell also indicated that it shipped nearly a million Dell-branded printers in the quarter, increasing its total shipments since March 2003 to 2 million units.

Meanwhile, it boosted its year-over-year revenue for storage systems by 47 percent and for peripherals by 36 percent. Desktop PCs shipments increased 21 percent, and notebooks rose 40 percent, Dell said.

Dell ended fiscal 2004 with a net income of $2.6 billion, or $1.01 per share, on revenue of $41 billion, moving it closer to its goal of reaching $60 billion in annual revenue.

Looking ahead, the company predicted that product shipments will increase by more than 20 percent, resulting in revenue of $11.2 billion and earnings per share of 28 cents for its fiscal first quarter.

Dell executives believe that two things will help the company in the current quarter. First, it expects prices for PC components to reduce. Second, it expects companies to increase the number of PCs they buy.

"The signs (we) are getting (are) relatively healthy, and we're seeing a lot of increase in demand from customers to replace their older installed base of products," Michael Dell, CEO, said in a conference call to discuss his company's earnings with reporters.

Demand from the smaller-size firms has been higher, overall, but sales to larger businesses have increased from where they were even a couple quarters ago, he said.

Meanwhile, Dell had been concerned about rising component prices. Indeed, when the cost of components such as dynamic random access memory or liquid crystal display screens increase, it can hurt Dell, as the company keeps only a few days' inventory on hand.

But component pricing "trends have been getting more favorable, as we (have gone) through the last quarter. I think we're moving into a more favorable (price) environment in the next quarter or two," Rollins said in a later conference.