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Friday, 16 November, 2001, 09:48 GMT
Dell profits suffer in price war
Workers in Dell factory
Dell is standing by its previous forecasts
US computer giant Dell Computer made a profit of $429m (300m) in the three months from August to October, 36% lower than the $674m it made in the same period last year.

Dell has been suffering from the intense price war between personal computer makers, fierce rivalry that Dell itself initiated.

But the results, which were earned on revenues of $7.5bn, were still better than analysts had expected, and the company insisted its finances had not been hurt by the aftermath of 11 September.

Although lowering prices may have dented the firm's bottomline, it has successfully been gaining market share from its competitors, including Compaq, Hewlett-Packard and Gateway.

"By consistently meeting customer requirements, we're gaining [market] share faster than ever in Dell's history," said the firm in a statement.

Government boost

The latest research shows that Dell has now won about 27% of the total personal computer market.

Strong government sales, traditionally a key feature for Dell in the third quarter, also helped ensure its financial targets were met.

And it replaced 10,000 computer systems in the first two days after the 11 September attacks on the World Trade Centre and the Pentagon.

This helped offset the slump in demand for personal computers on the back of the global economic slowdown.

And the firm said that its strong relationships with vendors and its management of the supply chain insulated it from the wider slump.

Financial muscle

Dell has been the only major computer company to meet its predictions of profitability. Only Apple, which competes for a different segment of the market, managed to meet its forecasts as well.

All its main rivals have reduced their profit forecasts in the wake of the attacks on the US.

Its financial muscle has allowed it to slash prices to the bone, hurting its competition.

Dell said it saw the corporate PC market continuing to contract, as companies cut back on upgrades.

Share success

But consumer sales should strengthen in the fourth quarter, it said, insisting its own sales will buck the trend and rise overall.

And the company said it was "optimistic" that next year should see some recovery across the industry.

Dell shares - which have gained almost 60% this year - rose slightly to close at $27.7 on the New York Stock Exchange.

 WATCH/LISTEN
 ON THIS STORY
Dell's European President, Paul Bell
"It is a tough market"
See also:

05 Oct 01 | Business
Dell moves ahead in PC battle
08 May 01 | Business
Dell to lay off 10% of staff
20 Apr 01 | Business
Dell becomes world's top PC maker
08 Apr 01 | Business
Dell admits hiring too many staff
15 Feb 01 | Business
Dell misses profit forecast
15 Feb 01 | Business
Death of the PC?
22 Jan 01 | Business
Dell warns on profits
08 Dec 00 | Business
Behind the profit warnings
04 Jan 01 | Business
PC sales fall in US
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