Dell Computer Corp’s high flying shares hit turbulence late on Thursday after third quarter numbers from the Texan PC maker finally showed signs of a slow down in sales and earnings growth. The shares closed down nearly 4% at $69.19 on the Nasdaq exchange and fell further in after-market trading to around $66. The results, however, were still superb and Dell continues to make the mid-teens growth rate of the overall PC market look positively pedestrian. Third quarter net profits at the Red Rock company were up 55% at $384m on revenues up 51% at $4.82bn. Earnings per share rose 65% to $0.28 in the quarter. Dell’s revenues have previously been growing at closer to 60% while earnings have grown by a compound 87% since 1995. Founder and chief executive Michael Dell said his company had seen strong growth across all customer segments and geographical regions. Revenues in Asia-Pacific/Japan grew by 49%, in Europe by 68% and in Dell’s domestic North American market by 46%, the company said. Corporate servers and workstations grew by 104% while Dell’s Latitude and Inspiron notebooks generated 93% growth. Gross margins for the quarter remained flat at 22.5% against last year’s figures, and while some analysts were predicting a sharp decline in the company’s average selling price (ASP), this remained stable sequentially at $2,400 but was down from $2,700 a year ago. Dell’s ASPs still, however, remain among the highest in the industry. Sales made through Dell’s industry leading web site are now running at $10m a day against just $6m three months ago, which the company claims was born of a dramatic surge in corporate relationship accounts. While internet-based sales used to be comprised of 80% consumer and 20% corporate, this has now switched to just 20% consumer and 80% corporate. Dell said this reflected a general shift in the company’s business towards the corporate user. As far as the market outlook goes, Michael Dell said he believed his company could sustain its historically impressive growth in the current healthy industry conditions. He predicted that this would continue as reducing component costs fueled end-user demand. Low inventory and a pioneering direct sales model drove Dell’s growth in its formative years but now the company says it will differentiate itself in the cut-throat PC market by offering the best customer experience in the industry.
