Servers, Net sales lift Dell

Dell Computer, buoyed by its server sales, reports strong fourth-quarter results and beats Wall Street's estimates again.

CNET News staff
2 min read
Dell Computer (DELL), buoyed by sales of its servers, reported strong fourth-quarter results and beat Wall Street's estimates for the fourth consecutive quarter.

Dell reported net earnings of $188 million, or $1.01 a share, for the quarter ending February 2, compared with profits of $70 million or 35 cents a share a year ago.

Wall Street had expected Dell to report earnings of 83 cents a share, according to First Call. In the previous three quarters, the company has come in above analysts' estimates from 5 cents to as much as 20 cents.

Revenues reached $2.4 billion for the quarter, up 57 percent from a year ago.

Driving revenues was a 310 percent increase in server sales during the quarter, accounting for 6 percent of all of Dell's systems revenues. The company in January shipped its PowerEdge 6100 rack-mountable, four-way Pentium Pro high-performance system.

Dell's also has plans this year to move into the server clustering market, putting it at the level of server giants Compaq and Hewlett-Packard.

The direct-order computer company, which launched an Internet site last July to handle sales, got a sales boost in the fourth quarter from its Web site.

"We believe the Internet, value-added services, and the workstation market present significant opportunities for Dell. The Internet could be considered the ultimate extension of our direct business approach, and we will be making significant investments to add Internet capabilities, which will improve convenience and total cost for our customers," said Michael Dell, chairman and chief executive, in a statement.

Meanwhile, Dell's European business grew by 34 percent in the quarter to $618 million over a year ago, while many companies experienced tough times in the United Kingdom due to a sluggish economy.

Sales in Germany, for example, grew 48 percent in the quarter over a year ago, while France posted a 62 percent increase for the quarter. But Asia grew the most at 60 percent for the quarter over last year to $476 million.

The company's gross margins dropped slightly to 21.7 percent in the quarter, and its inventory turns averaged the equivalent of 28 turns during the year.

Dell reported fiscal 1997 net earnings of $518 million, up from $272 million a year ago. Revenues reached $7.76 billion, an increase of 31.7 percent from a year earlier.