Dell shares get boost from strong earnings report

Dell Inc. has beat Wall street expectations for first-quarter sales and profit. The world’s second largest seller of personal computers rise their shares up 9.9 percent and the investors will try to determine if the results were a one-term or a sign that CEO plan is working. Notebook shipments jumped 43 percent in the first quarter compared with a year before which made them a priority in developing products for emerging markets. Also, the Round Rock, Texas-based company rang up more sales overseas than at home for the first time. Their revenue rose up to 19 percent in Asia, 15 percent in Europe. Also, other areas helped Dell to rise their weak American market from cutting back on technology spending. An analyst with American Technology Research said “Dell did relatively well, but it was against low expectations.”

Much of the strength has come from international businesses. Dell is more dependent on U.S sales than HP Co. and sees U.S business customers as “holding back from spending” on desktops. And Chief Financial Officer Donald J added that U.S companies may continue to defer technology spending into this summer. Dell trails Hewlett-Packard Co. in worldwide PC shipments but leads in U.S sales but that could make Dell more vulnerable to a slowdown in the U.S economy. They earned $784 million which is 38 percents per share in three months. Their revenue rose 9 percent to 16 billion. Their strong Asia sales were partly due to a 140 percent surge at 1800 stores in China that sell Dell machines. By august of this year, Dell wil be in 3,500 Chinese stores.

However, there were some critics that Dell’s strong first quarter was helped by the weak dollar and unusually sharp job cuts, which might be more difficult to repeat
Dell’s strong cost controls resulted in part from cutting 3,700 jobs in the quarter.
They had eliminated 7000 jobs in the past year which is 8 percent of last year’s work force. Although that has been partly offset by 2700 jobs added through acquisitions. Dell is trying to cut costs of $3 billion by 2011 and their biggest challenges for the company now were continuing to control costs and to improve the product line.

Opinion & thoughts,

From this case, I saw how a company can get a great success by getting support from their international Business. Business in Asian and European Countries helped their financial report to perform better which made their stock price higher. But I see no major strategy that they would improve drastically in the future. The reason is that this change in stock had only occurred by the change in the exchange rate which is unstable and flexible. Also, I think the Asian and Eurpean Market will be more competitive soon because of the fast growing technology. Therefore Dell should prepare and launch their new, innovative product by strong R&D.

http://www.newsweek.com/id/139157/page/3

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