Dell projects more revenue growth

07-04-2005

by Charlie Taylor

Dell has announced that it expects to meet its forecast for the first quarter with revenues of USD13.4 billion, up 16 percent from a year ago.

The PC manufacturer also reiterated its aim to grow the business over the next three to four years. Dell said that it expects earnings per share and cash flow from operations to continue to outgrow sales, a trend which should help Dell to meet its USD80 billion per year revenue goal.

In early February, Dell said that it expected first quarter revenues of USD13.4 billion and earnings per share of USD0.37, up 32 percent from a year earlier. This followed on from a tough fourth quarter in which the PC giant saw income slip 11 percent to USD667 million, or USD0.26 a share, which was blamed on a USD280 million charge for taxes related to the United States' American Jobs Creation Act. However, fourth quarter revenue jumped 17 percent to USD13.46 billion.

In addition to meeting its target for the first quarter, the company has announced that it intends to spend USD2 billion to repurchase stock during the current quarter, more than double Dell's original expectation. Over the past four years, stock buyback has reduced weighted average shares outstanding by more than 9 percent.

Dell, which is the world's biggest PC manufacturer, hit revenues of USD49 billion during its last fiscal year, which ended in January. It is expected to reach the USD60 million mark during this fiscal year and the company remains optimistic that it can top USD80 billion within four years.

Although the firm is famed for its desktop computers, Dell believes that the bulk of future revenues are going to come from increased sales of network servers, storage systems, printing and imaging goods, mobile computing products and enhanced services.

In those product and service areas, as well as regions outside the United States, Dell expects to continue to grow at rates even faster than its already-strong overall average.

"Our growth and profitability are based on a disciplined approach to defining new product and service categories, accelerating growth in existing businesses, and extending the value we create for customers in all of those areas," said Kevin Rollins, Dell's CEO, in a statement.