Dell reaffirms Q3 financial outlook

Dell Computer reaffirmed its third-quarter financial guidance in a conference call broadcast over the Web Thursday morning, reiterating its August earnings projection of US$0.15 to $0.16 per share and its revenue estimate of $7.2 billion to $7.6 billion.

Dell's business was not seriously affected by the halt of U.S. air transportation after the Sept. 11 terrorist attacks, said James Schneider, Dell's senior vice president and chief financial officer. The company attributed the unimpeded business to relationships with key vendors and aggressive supply-chain management.

The attack caused temporary supply-and-demand constraints, he said, adding that he has "no doubt" that the attack will negatively affect the overall market. The computer hardware market had been sliding sharply even before the attack, however, and company executives said they believe that trend could continue as customers postpone spending on discretionary IT equipment.

"We see a lot of pent-up demand" from corporate customers, Schneider said. "Whether it gets pushed into the fourth quarter or next year is hard to tell right now."

The October release of Microsoft's Windows XP operating system may spur consumer demand, and Dell executives said they hope to take advantage of market confusion in the wake of the pending merger between two close rivals -- Compaq Computer Corp. and Hewlett-Packard Co.

Dell profitably improved its worldwide market share in PCs and servers during the quarter, and reduced inventory in dollar terms by one-third during the quarter, maintaining a four-day supply of computer components. Overall unit shipments increased 19 percent.

Dell's third quarter ends Nov. 2. The company plans to announce third quarter results Nov. 15 and provide fourth-quarter guidance. Dell reported a loss of $101 million for its second quarter, on revenue of $7.6 billion. The loss could be attributed to a $742 million charge against earnings for job reductions. Without the charge, Dell earned $433 million.

Analysts polled by Thomson Financial/First Call estimate Dell will report $7.27 billion in third-quarter revenue with earnings of $0.15 per share.

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