Dell keeps zooming in Q3

Strong like bull

The profit machine that is Dell kept on rolling in the third quarter.

Dell brought in $10.6 billion in revenue for the period ended Oct. 31, which is a 16 percent increase over the same quarter last year. Dell churned out $677 million in net income for the quarter versus $561 million last year. These are rather stunning results given that Dell's hardware rivals came in flat or lost money in the quarter.

Dell used its success to put a bit of pressure on competitors.

"Customers and investors get best value over time from companies like Dell that are growing and financially very healthy," said Michael Dell, chairman of the board and chief executive officer. "The market should insist on both, and it's a credit to our teams and a better way of doing business that we're consistently meeting those expectations."

During a conference call, Kevin Rollins, president at Dell, added fuel to the fire, saying there are only two tenable business models left in the hardware industry - one around standards and one for custom gear. Those companies "stuck in the middle" have written off more than a billion dollars in charges during the year, he added, taking a clear jab at Sun Microsystems. The Dell exec uttered something about these charges being surprising in a stricter regulatory environment.

We're not 100 percent sure what he meant by that last bit given the fairly conservative accounting practices of Dell's Santa Clara-based rival. But it's Rollins' show to lead.

Dell's server business boomed in the quarter. Server shipments surged 30 percent, while storage shipments rose 68 percent. Total enterprise revenue accounted for 32 percent of Dell's revenue.

The Asia-Pacific region and Japan were two hot spots as well. They grew a combined 35 percent with servers and notebooks accounting for the majority of the sales.

The company, however, warned that all is not perfect in the land of dull.

"It is still a fairly muted and cautious environment in the corporate market," Rollins said. "We have seen a bit more light at the end of the tunnel in other markets such as consumer and medium business."

Component prices are another sore spot. LCD and memory costs remain relatively high.

For the fourth quarter, Dell expects shipments to rise more than 25 percent year-on-year. The company expects to pull in $11.5 billion - an increase of 18 percent. ®

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