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Dell raises 3Q targets

  1. munch

    3,567 posts.
    Dell raises 3Q targets

    Computer maker ups its revenue target, sees profits on the high end of prior forecast.
    October 1, 2002: 5:03 PM EDT



    NEW YORK (CNN/Money) - Dell Computer Corp. Tuesday raised the bar for its current quarter, forecasting revenue of $9.1 billion.

    Last month, executives of Dell, the No. 2 supplier of personal computers, had forecast revenue of $8.9 billion for the quarter, the company's fiscal third.

    Dell said earnings per share are likely to come in at 21 cents, which would be at the high end of its previously targeted range and more than 30 percent better than a year earlier.


    Company founder and Chairman Michael Dell cited growth in shipments of servers and storage systems, which are relatively new product areas for the Round Rock, Texas-based computer maker.

    Dell (DELL: Research, Estimates) stock rose to $1.13 to $25.77 in after-hours trading on Instinet from $24.64 at the regular close.

    The company made the announcement in connection with its two-day analysts' meeting, which kicked off in Austin, Texas, on Tuesday.

    Standing out from its competitors in the PC hardware industry, Dell has been gaining market share in its core markets while maintaining profitability and hitting its financial targets.

    At the same time, Dell competitors such as Hewlett-Packard (HPQ: Research, Estimates) and Gateway (GTW: Research, Estimates) have been losing market share and disappointing investors with their quarterly results.

    Much of Dell's performance during what has been one of the PC industry's most trying periods has been achieved through cost cutting. As have most other computer hardware makers, Dell has cut jobs, laying off more than 5,700 employees since early 2001.

    Dell's build-to-order business model -- under which customers order their computers directly from the company, making for more efficient supply-chain management and lower manufacturing costs -- also has helped it keep prices low.

    And analysts have been impressed by Dell's ability to leverage that model into other market segments, including servers and data-storage systems. The company last month also said it plans to work with Lexmark (LXK: Research, Estimates) to develop Dell-branded printers and has announced its intention to enter the handheld computer market as well.

    The company's recent moves have drawn kudos from Wall Street. Of the 22 brokerage firms that track Dell, 12 rate its stock a "buy," three rate it a "strong buy," while seven have "hold" recommendations.

    Earlier on Tuesday, Banc of America Securities upgraded Dell's shares to "buy" from "market perform," saying it is comfortable that the company has achieved a sustainable growth rate and praising Dell's recent entry into new market segments as proof that it can adapt its business model to take advantage of new profit opportunities.

    It generally was expected that Dell would reiterate its previous financial targets during the meeting.

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