Dell's Earnings More Than Double on Sales of Computing Gear to Big Corporations
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SAN FRANCISCO -- Businesses loaded up on new computers and servers from Dell during its fourth quarter in a sign that companies are increasing their spending on technology despite a weak economy.
Dell said Tuesday that net income in the fourth quarter more than doubled, to $927 million, or 48 cents a share, from $334 million, or 17 cents, in the year-ago quarter. The company said revenue for the quarter, which ended Jan. 28, climbed 5 percent to nearly $15.7 billion from $14.9 billion.
In after-hours trading after the earnings announcement, Dell's shares rose more than 5 percent, to $14.72. In regular trading, Dell's shares fell 18 cents, or 1.2 percent, to $13.91.
Dell, based in Round Rock, Tex., said that sales to large companies grew 12 percent to $4.7 billion in the fourth quarter compared with the period a year ago. Among small and medium-size businesses, sales rose 12 percent, to $3.7 billion. Some other large technology companies have reported strong corporate sales in recent weeks including I.B.M., Intel and Microsoft. One exception was Cisco Systems, which last week said that it was in transition and issued a tepid financial forecast.
"The corporate refresh cycle is alive and well," said Brian Marshall, analyst with Gleacher & Company.
But Dell's consumer business remained slow. Although businesses are replacing their old electronics, consumers are far more cautious about buying a new laptop or desktop computer. Consumer sales, which account for about 20 percent of Dell's overall business, fell 8 percent in the fourth quarter, to $3.3 billion, compared with the same period a year earlier.
Michael S. Dell, Dell's chief executive, reiterated that consumer demand was muted. But the company also said that it faced a tough comparison because last year at this time many people were buying new computers loaded with the new Windows 7 operating system.
First Published February 16, 2011 12:01 am
