Dell Computer Corp enjoys tweaking the market’s tail with results much better than expected, and it did it again after the market closed on Tuesday, reporting that profits nearly doubled in its third quarter, exceeding analysts’ estimates by a wide margin. The shares are getting top-heavy on the back of all that success, so Dell is to split them two for one. The $1.52 a share for the quarter compared with the $1.16 consensus average of 29 analysts surveyed by First Call. Chief executive Michael Dell pointed out that the company had grown at twice the rate of the market as a whole in six of the last seven years, and that selling directly to customers enabled Dell to balance supply and demand better and rapidly convert orders into cash. Dell also continued to improve its manufacturing efficiency, reducing inventory to incorporate new components into its products more quickly. Embarrassingly for Cupertino, with a $2,000m quarter, Dell will very soon be knocking on the door of Apple Computer Inc in terms of size. Sales of Dell’s notebook computers – not too long ago a disaster area for the company – rose 80% from a year earlier and 40% from its fiscal second quarter and comprised 19% of overall revenue. And sales of servers more than doubled from a year earlier and made up 4% of overall sales. Just six months ago, people were saying ‘Oh, Dell can’t do servers, that will never work.’ But here we are, company founder and chief executive Michael Dell Ieuters? Lower prices and new processors would, he said, be the driving force behind the escalating market for new machines, noting that Intel has one of the most dynamic roadmaps they’ve ever had next year. All these new chips are coming. The company said its third quarter was highlighted by a 41% sales increase in Europe to $482m and 35% sales growth in the Americas to $1,400m. We have solidified our position as the second largest personal computer company in the British market, said Mort Topfer, Dell vice chairman: Our other major European businesses, especially Germany and France, also continued to show impressive growth. The concern is that Dell is over-achieving more than most realise, and that it is simply winning much more of what is in fact a patchy market that is fleeing to quality.
