Dell revenue surges in Europe, Asia in Q2

Strong growth outside the U.S. in the second quarter lifted Dell to a record quarter in both revenue and earnings per share, the company announced Thursday.

The Round Rock, Texas, company posted revenue of US$11.7 billion, up 20 percent from the second quarter last year. Net income was US$799 million, a 29 percent increase.

Earnings per share were US$0.31, in line with the estimates of analysts polled by Thomson First Call. The revenue figures were also in line with analyst estimates, as well as the updated guidance provided by Dell in July.

Earlier in the day, Dell rival Hewlett-Packard (HP) missed analyst targets for revenue and earnings per share, blaming poor execution in its server business for the disappointing results. Other companies have sounded cautionary notes about the state of the technology industry over the last few weeks, but Dell has not seen any evidence of a slip in corporate spending, said Kevin Rollins, president and chief executive officer, on a conference call following Dell's announcement.

"Dell is a profoundly different company from other companies," Rollins said.

Shipments to Europe, the Middle East, and Africa rose 30 percent, the company said. Asia-Pacific and Japan posted a 28 percent increase in shipments during the quarter.

The growth in shipments outpaced the overall growth of those markets, leading to market share gains at HP's expense, Rollins said. Dell believes it picked up eight points of server market share in the U.K. during the quarter. Dell's operations in France also posted strong increases in shipments, the company said.

Growth in the U.S. continues to improve, Rollins said. Overall demand from Dell's corporate customers grew 21 percent during the quarter, according to a company statement, and the company believes it gained two points of market share.

"The U.S. continues to improve on a steady basis. The results of our corporate and SMB (small and medium-sized businesses) sectors are evidence of that, Rollins said.

Worldwide product shipments increased 19 percent compared to last year, Dell said. Rollins cited IDC figures on the conference call in claiming that Dell gained at least one point of market share in every product category worldwide.

Servers and printers were the fastest-growing product lines at Dell in the second quarter. Server shipments increased 31 percent, while revenue from Dell's laser printer business grew 43 percent, Rollins said.

Dell's inventories were a slight concern in the first quarter, but the situation improved in the second quarter. The value of Dell's inventory decreased by about US$7 million in the quarter to US$418 million.

Dell expects product shipments to increase 21 percent in the third quarter, resulting in revenue of US$12.5 billion. That would be an 18 percent increase over the third quarter of 2003, the company said.

Other tech companies, notably Cisco Systems, have reported decent earnings of late but have provided lower earnings guidance for the third quarter than many financial analysts would like to see. That isn't the case at Dell.

"We've given what you'd consider in this industry fairly bullish numbers. We've suggested in Q3 it's going to be about the same," Rollins said.

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