Dell Saw Jump in Revenue, Income, Shipments in 2Q

Officials on Thursday predicted the uphill climb to continue into the current quarter.

Dell Inc. saw large jumps in revenues, incomes and products shipped during the second quarter, and officials on Thursday predicted the uphill climb to continue into the current quarter.

The Round Rock, Texas, company earned $621 million for the quarter that ended Aug. 1, a 24 percent jump from the same year-ago period. Revenues came in at almost $9.8 billion, a 16 percent increase.

According to officials, total product shipments increased 27 percent from the same year. James Schneider, senior vice president and chief financial officer, also cited large shipment increases in the Asian and European markets.

"Weve shown that direct is a better way of doing business across the world, for our customers and for Dell," Schneider said during a conference call with reporters.

Desktop sales grew 25 percent, laptops 37 percent and servers 27 percent, he said.

Schneider and Chairman and CEO Michael Dell said recent analyst concerns that an increase in components, particularly memory, would have an impact on the companys bottom line didnt play out. Component costs overall dropped, though not by as much as in previous quarters.

Also, the company was able to offset any memory cost increases by continuing to hold expenses in line, Dell said. Operating expenses in the second quarter were 9.6 percent of revenue, an overall low.

For the third quarter, Schneider said Dell expects revenues to reach $10.5 billion, which would be a 15 percent increase over last year, with volume shipments jumping 25 percent.

Looking forward, Dell said he didnt expect a huge jump in IT spending by businesses.

"There is increased optimism among CEOs and large companies, but I dont really want to characterize it too strongly," he said. "It sort of incrementally improving.

"You think about large corporations [and know] their budgets are already set. When are their budgets set? Last year. There really hasnt been much happening to change their budgets."

Enterprises are spending money on IT, but it isnt in huge amounts, partially due to the growth of low-cost standards-based systems, he said.

"Corporations are upgrading their PCs they installed prior to year 2000, but its not a big bang install on a single day," he said.

Still, industry expectations are that 140 million to 150 million PCs will be sold this year, according to Dell.