Dell Meets Earnings Estimates

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Dell Computer Corp. Thursday reported a second-quarter profit lower than its year-ago results but in line with analyst expectations, as the top personal computer maker continued to lead the industry into a price war.

The Round Rock, Texas-based company posted a second-quarter profit of $433 million, or 16 cents per share, compared with net income of $603 million, or 22 cents per share a year ago. Analysts polled by Thomson Financial/First Call on average expected the company to earn 16 cents per share.

Dell said its sales were $7.61 billion, roughly flat with the same period a year ago, and just missing analysts' average hopes of $7.71 billion.

Prior to the company's earnings release, Dell shares ended Thursday Nasdaq trading off 12 cents, or 0.5 percent, at $25.38. The shares have traded in a 52-week range of $44.06 and $16.25.

Dell stock has risen more than 40 percent this year and outperformed its biggest rival, Compaq Computer Corp. by more than 50 percent as Dell took the No. 1 global PC sales spot.

Including a pretax charge of $742 million for job reductions, closing some facilities, and impairment of assets, Dell reported a loss of $101 million, or 4 cents a share, compared with year-ago net income of $462 million, or 17 cents.

The company said that it posted 33 percent growth in shipment of systems aimed at large businesses, which it has earmarked in recent quarters as important to higher profits.

"We increased shipments strongly in a down market, particularly in enterprise products," said Chairman and Chief Executive Michael Dell, adding that the company "gained more than two points of overall market share."

Dell says its direct sales model, meaning it does not have to share profits with resellers or keep much product on hand, has allowed it to push down prices and take market share from competitors despite tough times in the industry.