Dell Boosts Profits In 2Q

Dell Computer reported sales of $8.5 billion for its second quarter of fiscal 2003, an 11% increase from the $7.6 billion posted in the corresponding quarter a year ago.

Net income for the quarter ended Aug. 2 was $501 million, up 15.6% from $433 million in the same period last year, excluding special charges. Dell lost $101 million for its second quarter of fiscal 2002 after factoring in $742 million in charges for layoffs and facilities consolidation.

Dell generated 52% of its revenue through PC sales. But storage is beginning to play a bigger role, expanding to 70% in the second quarter and expected to reach $1 billion for fiscal 2003. Storage, servers, and workstations combined represent about $1.7 billion, or 20%, of revenue.

Company execs were optimistic about future revenue increases. Kevin Rollins, president and chief operating officer, says customers tell him it's no longer a matter of "if" IT spending will come back but rather "when" it will return. "We still continue to see a small, sequential improvement in [spending from] corporate accounts," he says.

Fueled by increasing market interest in clustered Linux servers and services to support those implementations, Dell projects it could see a 5% sequential revenue increase during the third quarter to $8.9 billion. New installations of clustered servers more than doubled from the first fiscal quarter to the second.