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DELL ANNOUNCES DISAPPOINTING FIRST QUARTER EARNINGS OF $.25 ON RECORD $672 MILLION IN REVENUES

 Notebook Business Depresses Otherwise Strong Results
 AUSTIN, Texas, May 25 /PRNewswire/ -- Dell Computer Corporation


(NASDAQ: DELL) today announced earnings per share of $.25 on record revenues of $672 million for the first fiscal quarter ended May 2, 1993. The company said poor results from its notebook business were the main reason for the lower than anticipated earnings.
 Dell said significant costs associated with delayed and cancelled notebook projects combined to lower the company's first quarter pretax income by more than $20 million, and EPS by as much as $.35.
 DELL COMPUTER CORPORATION
 Q1 Q1
 FY94 FY93
 Net Sales $672.4 $366.1
 Net Income $10.2 $19.8
 EPS $.25 $.52
 Shares O/S 40,455 38,030
 "We're obviously disappointed by the problems we've experienced despite our efforts to establish a competitive notebook business," said Michael Dell, chairman and chief executive officer. "We expect the notebook delays and cancellations to continue to negatively affect our earnings over the next two quarters. As a result, we no longer expect to reach our earnings forecast of $3.30 for this fiscal year. But because of the strong momentum in our core desktop and server business, we believe we can achieve revenues in excess of $3 billion this fiscal year."
 "We are very focused on fixing our notebook business and capturing the additional marketshare notebooks represent," Mr. Dell continued. Dell's notebook revenues declined in the quarter versus a year ago and represented six percent of the company's consolidated revenues.
 Despite the notebook shortfall, worldwide sales increased 84 percent to $672 million over the prior-year period as the company continued to gain global marketshare with its desktop and server products. Year-to- year sales gains were equivalent in both the domestic and international businesses.
 Unit sales for desktop and server systems increased more than 155 percent over the same quarter a year ago, fueled by strong demand for the company's "L" and "M" series of products introduced this past December. The company noted that demand for the new "L" series systems, which sport a light-weight and easily-serviced chassis, was particularly strong. Dell intends to incorporate the innovative chassis design in all its desktop and server products over the course of the year. "The order rate of our desktop and server products continued to increase in the quarter," Mr. Dell said, adding that the order rate in the last month of the quarter reached an all-time high, up 25 percent from the order rate in the final month of the prior period.
 Worldwide revenue gains were led by sales to major corporate, government and educational accounts, which more than doubled to $330 million versus the same quarter a year ago, marking the fourth consecutive quarter of year-to-year sales growth in excess of 100 percent for major accounts. With Pentium products coming on-line and a number of other desktop and server products planned for the near future, Dell expects to continue to gain significant marketshare in large accounts in the months ahead.
 Sales to medium- and small-sized businesses and individual customers posted gains of 76 percent to $259 million compared with the same period a year ago, while sales to resellers and integrators increased 43 percent to $83 million.
 "The traditional strengths of our business remain sound," said Mr. Dell. "Our drive to gain marketshare is succeeding, and we've established ourselves as a powerhouse in the desktop and server markets. We now intend to overcome near-term set-backs in our notebook business and firmly establish ourselves in that fast-growing and lucrative market as well."
 Dell continued to maintain tight expense control during the first fiscal quarter. Operating expenses represented 14.7 percent of sales during the quarter compared with 19 percent in the first quarter of fiscal 1993. The decrease was achieved despite investments in information systems, international expansion and process improvements.
 Inventories for the quarter represented approximately 8 weeks of sales, consistent with the company's traditional inventory levels.
 The effective tax rate was 32 percent, versus 30 percent in the first quarter of fiscal 1993. The increase was primarily due to the expiration of certain research and development tax credits and a change in the geographic distribution of taxable income.
 A Fortune 500 company, Dell Computer Corporation designs, develops, manufactures, markets, services and supports a complete line of personal computers compatible with industry standards. Dell pioneered the direct marketing of personal computers in 1984 and was the first company in the industry to offer manufacturer-direct technical support. According to Dataquest, a market data organization, Dell is the fifth largest personal computer company in the world, with fiscal 1993 revenues of more than $2 billion. Information on the company and its products can be obtained through its toll-free number: 1-800-BUY-DELL (1-800-289-3355).
 Dell is a registered trademark of Dell Computer Corporation.
 Dell Computer Corporation disclaims any proprietary interest in the marks and names of others.
 DELL COMPUTER CORPORATION
 Condensed Consolidated Statement of Financial Position
 (In thousands)
 5/2/93 1/31/93
 (unaudited)
 ASSETS
 Current assets:
 Cash and cash equivalents $ 37,925 $ 14,948
 Short term investments 83,002 80,367
 Accounts receivable, net 431,334 374,013
 Inventories 341,663 303,220
 Other current assets 84,317 80,239
 Total current assets 978,241 852,787
 Property and equipment, net 83,487 70,462
 Other assets 3,392 3,756
 Total $ 1,065,120 $ 927,005
 LIABILITIES AND STOCKHOLDERS' EQUITY
 Current liabilities:
 Notes payable $ 23,000 $ 8,500
 Accounts payable 347,623 295,133
 Accrued liabilities 144,688 162,973
 Income taxes 25,646 27,233
 Total current liabilities 540,957 493,839
 Long-term debt 122,162 48,373
 Other liabilities 19,864 15,593
 Stockholders' equity 382,137 369,200
 Total $ 1,065,120 $ 927,005
 DELL COMPUTER CORPORATION
 Condensed Consolidated Statement of Income
 (In thousands, except per share data - unaudited)
 Three months ended 5/2/93 5/3/92
 Net sales $ 672,364 $ 366,122
 Cost of sales 559,240 270,089
 Gross profit 113,124 96,033
 Operating expenses:
 Marketing and sales 73,428 48,862
 General and administrative 14,106 10,173
 Research, development and
 engineering 11,441 10,413
 Total operating expenses 98,975 69,448
 Operating income 14,149 26,585
 Net financing and other
 income 828 1,494
 Income before income
 taxes 14,977 28,079
 Provision for income taxes 4,792 8,283
 Net income $ 10,185 $ 19,796
 Earnings per share $ 0.25 $ 0.52
 Weighted average shares
 outstanding 40,455 38,030
 -0- 5/25/93
 /CONTACT: Michele Moore or Roger Rydell, 512-794-4100, or investors, Don Collis or Ken Smith, 512-338-8671 or 512-794-4034, all of Dell Computer Corporation/
 (DELL)


CO: Dell Computer Corporation ST: Texas IN: CPR SU: ERN

SM -- NY016 -- 1986 05/25/93 08:24 EDT
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