Dell's 4Q in line with lowered estimates

Dell Computer Corp. (Nasdaq: DELL) met reduced estimates in its fourth quarter and said it expects flat growth on the bottom line in the first quarter.

The computer maker on Thursday reported fourth quarter earnings $436 million, or 16 cents a share, on sales of $6.8 billion. The quarter included a one cent gain on investments, putting the results in line with First Call forecasts.

First Call consensus lowered its profit estimate from 21 cents a share to 15 cents a share last month after Dell warning that its fourth-quarter earnings would fall short of expectations.

Dell shares closed up 3 15/64 to 38 51/64 ahead of the earnings report.

At the time, Dell said an "inconsistent" flow of key semiconductor components and a slower-than-expected rebound in sales to corporate and institutional customers related to the Y2K rollover was responsible for the shortfall.

During an afternoon conference call with analysts, Dell executives reiterated the outlook stated two weeks ago. Dell foresees revenue growth in the low 30 percent range in fiscal 2000, with single digit sequential growth in the first quarter.

Expect first quarter earnings to be flat sequentially as the company tries to revive demand now that Y2K fears have subsided, CFO Tom Meredith said.

The $6.8 billion in sales marks a 31 percent improvement from the year-ago quarter when it earned $425 million, or 15 cents a share, on sales of $5.2 billion.

For the fiscal year, the PC maker earned $1.9 billion, or 68 cents a share, on sales of $25.3 billion, up from a profit of $1.5 billion, or 53 cents a share, on sales of $18.2 billion in fiscal 1998.

Despite the disappointing quarter, Dell continues to grow faster than all its peers, Meredith said. The company's reliance on desktop PC sales is decreasing, with desktops now generating just slightly more than half of Dell's revenue, Meredith said.

"We are the Internet server company," he told analysts. "We are in the exact spot where billions of dollars will be spent building online infrastructure."

In the quarter, Dell averaged $40 million a day in sales from its Web site, accounting for roughly 50 percent of the company's total sales.

Dell's worldwide services sales jumped to more than $490 million, up 50 percent from the year-ago quarter.

Sales of software and other peripherals improved by 32 percent to $610 million in the quarter. Non-system sales accounted for 16 percent of its total sales.

Total PC shipments jumped 36 percent from the year-ago quarter and 50 percent for the fiscal year.

By region, Dell's sales improved 8 percent to Europe while sales into the Asia-Pacific and Japanese markets improved 56 percent in the quarter. Sales into China, now Dell's eighth-largest market, more than doubled.

Sales of its workstations, storage products and servers jumped 55 percent in the quarter, with Dell's server sales representing 40 percent of the worldwide growth.

Notebook computers made up 28 percent of Dell's total systems revenue in the quarter, up from 23 percent in the year-ago quarter.

Dell Computer Corp. (Nasdaq: DELL) already let the cat out of bag, warning that its fourth-quarter earnings will fall short of analysts' estimates.

First Call consensus now expects a profit of 15 cents a share in the quarter, down from the original estimate of 21 cents a share.

-- Sergio G. Non contributed to this report.