Dell Posts Record Revenue in First Quarter

As the company reports a 22 percent revenue increase, Michael Dell says he's most optimistic about the company's burgeoning printer business.

Dell continued its upward financial trend, posting record revenue numbers during its first fiscal quarter.

The Round Rock, Texas, company, which ended fiscal year 2004 with more than $41 billion in revenue, posted $11.5 billion in the quarter ended April 30, a 21 percent jump over the same period last year.

Dell Inc., which is working toward annual revenues of $60 billion, earned $731 million for the quarter, a 22 percent increase over the first quarter of 2004.

Jim Schneider, Dell senior vice president and chief financial officer, said during a conference call with reporters Thursday that overall product shipments were up 25 percent over the same quarter last year, driven by a combination of growing corporate spending, growth in overseas markets and continued market-share growth in key areas such as servers and printers.

"Lots of revenue growth is from us taking market share," Schneider said. "Its a better environment to be in, and were seeing market growth in corporate spending."

/zimages/4/28571.gifDell has changed tech buying and selling for the better, Editor Eric Lundquist writes. Click here to read more.

The quarter was the best for corporate spending in more than three years, Schneider said. Replacement of older systems is helping, he said.

"Youre not seeing those huge replacements," Schneider said. "But youre seeing more people [being] more active and more bids and interests in upgrades."

Server shipments grew 24 percent, while volumes of storage devices from Dells partnership with EMC Corp., of Hopkinton, Mass., jumped 25 percent. Dell focused a lot of attention on the storage business—particularly the midrange area—adding new systems, services and tools into the mix in the first quarter.

Printers also were surprising, with market share growing faster than any other product in Dell history, Schneider said. After one year of selling Dell-branded printers, its U.S. market share in inkjet printers is more than 10 percent, he said. Its about 17 percent in all-in-one printers.

In a recent interview with eWEEK, Dell chairman and CEO Michael Dell said he is most bullish about the companys printer business going forward.

"This will be the first full financial year of our printer business, and well probably sell about a billion dollars worth of printers," he said. "If you asked what am I most optimistic about five to 10 years from now, I would say printers."

Dell officials said they expected to sell about 1 million printers in the first year; after nine months, the company had sold almost 2 billion units. Dell said the company was able to drive down the cost per page for customers, making its printers attractive.

In response to questions regarding pricing pressures, particularly from Hewlett-Packard Co. in such areas as servers and PCs, Schneider said not much has changed.

/zimages/4/28571.gifDell overcame HP in worldwide PC shipments for the first quarter of 2004. Click here to read more.

"The pricing environment has been consistently competitive for a year or so now," he said.

Overseas, Dell saw product shipments grow at least 33 percent in 14 countries, and it became the top seller of standards-based computers in Japan, overtaking NEC Corp., Schneider said.

Dell also has added jobs, he said. In the last quarter, the company added 1,500 to 1,800 new jobs, more than half of those being created outside the United States.

Looking forward, Schneider said Dell expects to generate $11.7 billion in revenue for the second quarter, a 20 percent jump over the same period last year. The company also expects a 24 percent increase in product shipments.

/zimages/4/28571.gifCheck out eWEEKs Desktop & Notebook Center at for the latest news in desktop and notebook computing.