The irresistible rise of Dell Computer Corp continued on Tuesday as the Round Rock, Texas computer maker revealed exceptional first quarter growth across revenues, profits and all geographic regions. First quarter net profits were up 54% at $305m on revenues that rose 52% to $3.92bn. Earnings per share came in at the high end of expectations at $0.44 beating the consensus of estimates by Dell’s customary few pennies. In the Americas, Dell grew revenues by 50% to $2.6bn while European revenues grew 62% to $1.0bn, prompting claims by Dell that it has supplanted Hewlett-Packard Co as the number three computer system supplier in Europe. Even in the potentially tricky Asia-Pacific region, Dell saw revenue increases of 35% to $269m, against a claimed market backdrop of a 7% overall decline. By product line, network server and workstation revenues grew 177%, notebook revenues grew by 87% and desktop PCs increased by 40%. On-line sales from Dell’s web site are running at a claimed $5m a day, which when growth is factored in, gives annualized web-based sales of an impressive $2bn. Last year, Dell managed to sell $12bn worth of computers from an average inventory holding of just $250m, a level of inventory which the company has maintained for the last two years in the face of exploding sales volumes. Dell, which pioneered the direct sales technique, now seems to be just as capable at improving its invention, teaching the business world a lesson in exponential growth without falling prey to over trading. With a stock price of over $94, Dell’s shares are trading at a one year forward earnings multiple of 50 times, compared to 40 for its big brother Compaq Computer Corp.
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