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Dell meets 2Q, warns
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August 16, 2001: 7:00 p.m. ET
PC maker earns 16 cents per share in 2Q; says 3Q sales will be flat
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NEW YORK (CNNfn) - Dell Computer said Thursday it met analysts' second-quarter earnings estimates as sales fell 1 percent from the year-ago period to $7.6 billion, but said third-quarter sales would be flat to down 5 percent.
For the quarter, the world's top supplier of personal computers earned $433 million, or 16 cents per share, compared with $603 million, or 22 cents per share, for the same quarter a year ago.
The results exclude a pretax charge of $742 million for job reductions, consolidation of facilities and impairment of assets, and are in line with guidance Dell gave in late July.
Both Dell's earnings and revenues for the quarter are in line with the estimates of analysts surveyed by research firm First Call.
But the company said in a conference call third-quarter earnings would be 15 or 16 cents per share, below First Call's consensus number of 17 cents per share.
"The company did deliver in a very tough environment," U.S. Bancorp Piper Jaffray analyst Ashok Kumar told CNNfn's N.E.W. Show.
Kumar said market will be a lot more forgiving of Dell than other makers as the only player to perform in the sector and the one best positioned for a possible rebound in the sector. (454K WAV or 454K AIFF)
"For the outlook, we continue to see weakening demand in Europe, a lack or re-acceleration in demand in the domestic market, and as a result we won't have sequential growth for the industry as well as for Dell until the December quarter at the earliest," he said.
Dell says no price war
Dell (DELL: Research, Estimates) said desktop demand was down from the year-ago period, but notebook shipments rose 22 percent from the same quarter a year ago.
"The weakest part of our overall business is in U.S. corporate sales in general, probably desktops," Dell Vice Chairman Kevin Rollins told The N.E.W. Show.
The PC maker said price competition contributed to gross margin falling to 17.5 percent of revenue from the prior quarter's figure of 18 percent.
Rollins told CNNfn Dell had no intention of cutting prices and getting into another PC price war.
"We're not taking the battle to them as long as they don't try to take it to us," he said.
Dell also said revenue "was significantly affected by further sharp reductions in component costs" and those savings were passed on to customers.
Dell's direct sales model, which allows it to pass on falling component prices to its customers, is widely seen as giving the company the upper hand against its rivals as overall PC demand weakens.
"Bottom line is we don't wee any meaningful uptick until spring of next year," Kumar said.
The company said it kept the top spot for U.S. server shipment share for the second quarter in a row, with company server shipments rising 25 percent from last year in an overall U.S. market which dropped 13 percent.
Shipments of the company's enterprise systems – servers, storage products and workstations – rose 33 percent from the year-ago period.
Shares of Dell fell 55 cents to $24.83 after hours. 
-- from staff and wire reports
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