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Dell Profit Grows 27% In Quarter

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The Associated Press

Published: November 30, 2007

DALLAS - Dell Inc. said earnings grew 27 percent in the third quarter, buoyed by growth in overseas markets such as Brazil and by prices falling for memory chips and other components.

The results fell just shy of analyst expectations.

Dell, which posted results after markets closed Thursday, earned $766 million, or 34 cents a share, in the three months ended Nov. 2. That was up from $601 million, or 27 cents a share, in revised figures from the same quarter a year ago. Revenue grew 9 percent to $15.64 billion.

Analysts surveyed by Thomson Financial were expecting the company to post profits of 35 cents a share on revenue of $15.34 billion.

Shares in Dell rose almost 2 percent in regular trading Thursday to close at $28.14. Trading was heavy after hours, with shares falling more than 8 percent, reaching $25.79.

Dell Chief Financial Officer Don Carty and founder and Chief Executive Officer Michael Dell said the company will continue to face additional costs as it restructures. These will include additional acquisitions, more layoffs and what Carty described as a slower decline in component costs.

The company no longer provides a specific outlook in its earnings statements.

It's been a rough time for Dell since August 2006, when the Round Rock-based computer giant first disclosed an internal accounting investigation and issued a massive notebook battery recall. A few months later, Dell lost its No. 1 position in the PC market to rival Hewlett-Packard Co. and has yet to gain it back.

Extensive changes have followed, including the return of Michael Dell as CEO, a global effort to make some of its consumer products available at retail stores, instead of only on the Internet, and plans to lay off 10 percent of its work force.

"We embarked this year on a long-term strategy to reignite growth, and our third quarter results indicate we're making solid progress through investments in five key business priorities: consumer, emerging countries, notebooks, enterprise and small-medium business," Michael Dell said in a statement.

Yet HP continues to expand and now leads Dell by nearly 5 percentage points, commanding 20 percent of the U.S. market, compared with Dell's roughly 15 percent, according to the latest data from market researcher IDC.

During the quarter, Dell shipped about 9.9 million computers worldwide, compared with HP's 12.8 million, according to research firm Gartner Inc. Dell also had about 14.4 percent of the worldwide PC market, down from 15.9 percent a year earlier and below HP's 18.6 percent.

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