Dell Q4 results up on server shipment strength

Dell set records for revenue and product shipments in the fourth quarter of its 2004 fiscal year as the company continued its strong financial performance of the last year, it said in a release Thursday.

Revenue was $11.5 billion, up 18 percent from the $9.7 billion recorded in the fourth quarter of fiscal 2003 and in line with estimates from analysts polled by Thomson First Call. Net income was $749 million, up 24 percent from $603 million a year earlier.

Earnings per share were $0.29 for the quarter, which ended Jan. 30. This was slightly ahead of analyst estimates of $0.28.

Servers led the way for Dell, with shipments increasing 40 percent compared to last year’s fourth quarter. Storage revenue increased 47 percent, and Inspiron and Latitude notebook shipments increased 40 percent.

Dell’s enterprise customers are starting to purchase IT equipment at rates not seen in recent quarters, said Jim Schneider, Dell’s chief financial officer, during a conference call to discuss the results.

“As profits are coming back, they’re realizing why they invested in information technology to begin with,” said Michael Dell, chairman and chief executive officer.

Dell has received more invitations to bid on corporate upgrade projects and is seeing more activity among its larger accounts, Schneider said.

Profitability at the Round Rock, Texas, company continues to improve from year to year as it sells more enterprise products such as servers and storage, Dell said. For the fourth quarter of fiscal 2004, growth in its enterprise product group was 32 percent. That segment now represents 21 percent of Dell’s overall business, up from 19 percent in the fourth quarter of last year, he said.

The fourth quarter is a time of heavy consumer spending, and Dell’s results also reflected that trend. Revenue from its software and peripherals division, which includes its newly introduced digital televisions, DJ music player and Axim personal digital assistants, increased 36 percent. Dell sells both its own products in this category as well as products from other companies, and half of the fourth-quarter revenue came from Dell-branded products, it said.

The company’s healthy results extended around the world. Fourth quarter shipments increased 33 percent in Europe, the Middle East, and Africa. Total shipments to Asia-Pacific and Japan increased 36 percent, including a 47 percent increase in shipments of servers and notebooks to China.

North and South America still represent the bulk of Dell’s business, accounting for 67 percent of revenue in the fourth quarter. Europe provided 22 percent, while Asia-Pacific and Japan accounted for 11 percent.

For the full year, Dell recorded $41.4 billion in revenue, an increase of 17 percent from fiscal 2003 revenue of $35.4 billion. Net income for the full year was $2.6 billion, up 25 percent from net income of $2.1 billion recorded in 2003.

Looking ahead to the first quarter of fiscal 2005, Dell expects product shipments to increase more than 20 percent. Revenue will be about $11.2 billion, which would represent an increase of 17 percent as compared to the first quarter of fiscal 2004.