Dell brings home Q3 bacon

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Dell produced a bumper third quarter result, booking US$561 million in earnings on US$9.1 billion in revenue for the period and announcing the fourth quarter will be 20 percent up on the same period last year.

Profit was up 31 percent from the US$429 million reported a year ago, while revenue was up by 22 percent, from US$7.5 billion. Earnings per share were 21 cents, matching the company's forecast of six weeks ago and Wall Street's expectations, up from 16 cents a year earlier.

During the quarter, Dell gained share in the PC market, taking over the top spot from Hewlett-Packard. Dell's PC business accounts for about 80 percent of the company's revenue. The company saw strong sales of its Precision workstations and Latitude notebook computers.

Dell is the top provider of workstations worldwide, with 41 percent of the market, according to Dataquest, a division of Gartner. The research firm says Dell shipped 149,004 workstations in the third quarter of the calendar year, compared with 81,125 from HP, 56,442 from IBM, and 52,774 from Sun Microsystems.

Dell's outlook for its fourth quarter is bullish, with revenue expected to be up 20 percent to US$9.7 billion. The company is counting on growth in several key areas, including sales of low-end servers that are used in Linux clusters and storage. Other emerging areas for Dell include handheld computers and printers.

"There's an execution risk of extending into other areas, but so far they have been successful extending in other areas such as servers and storage," said Nick Nilap, an analyst with Fitch Ratings.

Although there's a substantial amount of research and development that will go into Dell's printer products, Nilap says the vendor isn't strapped for cash and in the past has found ways to defray R&D costs by using commodity technology from partners such as Microsoft and Intel.

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