Dell to Meet Q3 Expectations
Just days after rival Compaq Computer Corp. announced its quarterly earnings will fall short of expectations, Dell Computer Corp. Thursday said it will meet expectations. In mid-August, the Round Rock, Texas, computer maker said revenues for the third quarter would be $7.2 billion to $7.6 billion, or 15 to 16 cents a share.Earlier this year, Dell overtook Houston-based Compaq as the worlds top PC vendor. Dell pushed its way to the top of the struggling industry primarily through an aggressive pricing strategy that cut into its profit margins and forced Compaq and other computer makers to follow suit. In a statement released before the conference call, Dell said he expects to continue gaining market share. "Were winning new customers at a rapid rate and successfully managing our operating expenses," he said. "Those strengths in the midst of a trying period give us great confidence for the long term." Dell is scheduled to announce third-quarter earnings on Nov. 15. On Monday, Compaq Chairman Michael Capellas said such factors as the Sept. 11 terrorist attacks, the proposed acquisition by Hewlett-Packard Co. and the struggling economy produced "the perfect storm" that battered its business. For the third quarter, which ended Sept. 30, Compaq expects revenues to be $7.4 billion to $7.5 billion, a decline of 12 percent from the previous quarter that will result in a loss of 5 to 7 cents a share. The company had projected revenues of $8 billion to $8.4 billion, and earnings of 7 to 9 cents a share. On Sept. 4, Compaq said it had agreed to a buyout by HP, of Palo Alto, Calif., in a stock-based merger initially pegged at $25 billion. However, the negative reaction from Wall Street sent the value tumbling to $21 billion, and the value continued to fall to about $17 billion after the attacks in New York City and Washington. "The events of Sept. 11 disproportionately affected the current quarter," Capellas said. "Market demand slowed, and transportation and logistics were disrupted." However, Dell officials said that their companys aggressive supply chain management buffered it against the nationwide disruption in transportation following the attacks.
In a conference call with Wall Street analysts Thursday morning, Chairman and CEO Michael Dell said the company is on track to meet those numbers and that Dells strategic, operating and financial position continues to be strong.