Dell Computer Corp, the world's second-largest personal computer maker, increased its forecast for sales and profit this quarter on a rise in consumer and government demand. The company's shares jumped 7.5 percent.
"I'm trying to contain my glee -- it's great," said James Lyon, who helps invest US$340 million at Oakwood Capital Management, owner of 135,000 Dell shares. "Dell continues to execute the same way they've executed for the past two years. They continue to take market share from their competitors."
Earnings in the second quarter ending Aug. 2 will be US$0.19 a share on revenue of US$8.3 billion, compared with a May estimate of US$0.18 on sales of US$8.2 billion. In last year's second quarter, Dell had a net loss of US$0.04 on sales of US$7.6 billion.
Sales are rising on strong demand in the US from customers in the consumer, education and government markets, Dell said. The company has used appearances on the QVC home-shopping television network and advertisements aimed at students and home users to win business from rivals such as Hewlett-Packard Co and Gateway Inc, even as the PC market shrinks.
Dell shares climbed as high as US$25.72 after the company boosted its forecast. The stock gained US$0.26 to US$23.93 in regular US trading before the announcement and has declined 12 percent this year.
Computer-related shares in Asia also got a boost, with Taiwan's Quanta Computer Inc rising as much as 6.2 percent to NT$85.50 and Samsung Electronics Co gaining as much as 5.6 percent to 350,000 won. Quanta and Samsung both supply notebook computers to Dell.
Dell became the second-largest PC maker after Hewlett-Packard completed its acquisition of Compaq Computer Corp in May. Dell's announcement means it's been successful in lowering prices aggressively to win market share, said Andy Neff, an analyst for Bear Stearns & Co, who owns shares of Dell.
In the first quarter of this year, Dell was the only large PC maker to gain market share and increase unit shipments, according to researchers Dataquest Inc and IDC. Dell's shipments rose 16 percent in the period, even as PC unit sales industrywide dropped 2.7 percent, IDC said in April.
"Dell is very intent on pulling all the levers they can to regain the No. 1 spot," said Neff.
Dell has credited the jump in consumer sales in part to its TV advertising starring a youthful pitchman, Steven, who helps confused PC buyers with features and exclaims, "Dude, you're getting a Dell!" The company spent US$361 million on ads in its last fiscal year.
The PC maker's profit also is benefiting from lower prices for components such as dynamic random-access memory chips and flat-panel monitors, Neff said.
Dell said profit as a percentage of revenue will be up "sharply" from the previous quarter and from a year ago.
Investors have been waiting for signs of a rebound in PC sales to large companies, Dell's main customers. The company didn't say in today's release whether businesses have boosted spending, and officials weren't available for interviews, spokesman T.R. Reid said.
Businesses will increase buying by the fourth quarter to take advantage of a new tax law implemented earlier this year that allows for accelerated depreciation of investments, Lyon said.
"The rebound on the corporate side is coming," Lyon said. "In the fourth quarter a lot of companies holding back on capital spending will let some loose."
Two days ago, Chief Operating Officer Kevin Rollins reiterated the company's earlier target.
SECURITY: As China is ‘reshaping’ Hong Kong’s population, Taiwan must raise the eligibility threshold for applications from Hong Kongers, Chiu Chui-cheng said When Hong Kong and Macau citizens apply for residency in Taiwan, it would be under a new category that includes a “national security observation period,” Mainland Affairs Council (MAC) Minister Chiu Chui-cheng (邱垂正) said yesterday. President William Lai (賴清德) on March 13 announced 17 strategies to counter China’s aggression toward Taiwan, including incorporating national security considerations into the review process for residency applications from Hong Kong and Macau citizens. The situation in Hong Kong is constantly changing, Chiu said to media yesterday on the sidelines of the Taipei Technology Run hosted by the Taipei Neihu Technology Park Development Association. With
CARROT AND STICK: While unrelenting in its military threats, China attracted nearly 40,000 Taiwanese to over 400 business events last year Nearly 40,000 Taiwanese last year joined industry events in China, such as conferences and trade fairs, supported by the Chinese government, a study showed yesterday, as Beijing ramps up a charm offensive toward Taipei alongside military pressure. China has long taken a carrot-and-stick approach to Taiwan, threatening it with the prospect of military action while reaching out to those it believes are amenable to Beijing’s point of view. Taiwanese security officials are wary of what they see as Beijing’s influence campaigns to sway public opinion after Taipei and Beijing gradually resumed travel links halted by the COVID-19 pandemic, but the scale of
A US Marine Corps regiment equipped with Naval Strike Missiles (NSM) is set to participate in the upcoming Balikatan 25 exercise in the Luzon Strait, marking the system’s first-ever deployment in the Philippines. US and Philippine officials have separately confirmed that the Navy Marine Expeditionary Ship Interdiction System (NMESIS) — the mobile launch platform for the Naval Strike Missile — would take part in the joint exercise. The missiles are being deployed to “a strategic first island chain chokepoint” in the waters between Taiwan proper and the Philippines, US-based Naval News reported. “The Luzon Strait and Bashi Channel represent a critical access
Pope Francis is be laid to rest on Saturday after lying in state for three days in St Peter’s Basilica, where the faithful are expected to flock to pay their respects to history’s first Latin American pontiff. The cardinals met yesterday in the Vatican’s synod hall to chart the next steps before a conclave begins to choose Francis’ successor, as condolences poured in from around the world. According to current norms, the conclave must begin between May 5 and 10. The cardinals set the funeral for Saturday at 10am in St Peter’s Square, to be celebrated by the dean of the College
RSS