Dell Profits from Sales of AMD Chips

Dell on Tuesday pointed to its adoption of processors from Advanced Micro Devices (AMD) for pushing it to US$677 million in profit for the third quarter, though the company has delayed reporting final numbers due to an accounting investigation by the U.S. Securities and Exchange Commission (SEC).

Dell’s preliminary results mark an improvement over the third quarter last year, when it reported $13.91 billion in revenue and a profit of $606 million. Dell reported revenue of $14.38 billion for the quarter, which ended Nov. 3, 2006. Dell did not offer an official comparison to the previous year’s figures, however.

Dell reported earnings of $0.30 per share for the third quarter in 2006, beating the estimates of analysts who expected the company to earn $0.24 per share on revenue of $14.44 billion, according to a survey by Thomson Financial.

The company was scheduled to report its earnings last Thursday, but delayed the move because it was trying to cooperate with investigations by the SEC and the U.S. attorney for the Southern District of New York. Company leaders had cited the same reason after they missed a deadline for notifying the SEC of their second-quarter earnings. They have still not filed that report, called a Form 10-Q.

Company executives were not available to comment on the results. The company filed the numbers in a press release only, skipping the traditional conference call with reporters and analysts.

Dell pointed to its success in selling computers powered by AMD processors for its impressive numbers. After missing its earnings target for the first quarter, Dell said in May it would finally diversify from selling computers with chips from Intel.

Still, Dell is having a rocky year. In June, Chief Executive Kevin Rollins promised to rebound from weak earnings by investing $100 million in customer service and by using fewer rebates in setting PC prices. But in August, Dell was forced to recall 4.1 million defective laptop batteries. Next, Dell acknowledged it was under investigation by the SEC, and, this fall, lost its status as world’s largest PC vendor to rival Hewlett-Packard (HP).

HP turned up the pressure last week when it reported net income of $1.7 billion for the fourth quarter, more than four times its mark for that period last year.

By Ben Ames, IDG News Service (Boston Bureau)

Related Links:

• Dell Earnings Delayed by SEC Probe

• HP Overtakes Dell in Global PC Space

• Dell to Recall 4.1M Batteries Due to Fire Hazard

• HP Quadruples Income for Fourth Quarter

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