Dell's Swell Smell Quells Knell

In the rough-and-tumble waves of personal computing, Dell Computer (Nasdaq: DELL) has been smooth and buoyant. So perhaps it shouldn't have been a surprise to see the company reaffirm that it's on track to earn $0.37 a share on a 16% gain in revenue for its fiscal first quarter. Now looking to hit the $80 billion mark in annual sales in three to four years, Dell's consistent growth looks poised to continue.

Dell's rivals haven't been as fortunate. While Hewlett-Packard (NYSE: HPQ) recent experienced turbulence at the helm and Gateway (NYSE: GTW) dabbled in consumer electronics before scooping up eMachines to focus on its core strengths, Dell has stayed true to its consumer-direct roots, and it has paid off splendidly.

Back in February, the company posted fiscal 2005 results that, once again, failed to disappoint. Earnings before a tax charge rose by 28% to hit $1.29 a share for the year, while revenues climbed 19% higher to hit $49.2 billion.

Wait a minute -- Dell thinks it can grow from $49.2 billion to $80 billion in a few short years? If it's able to achieve that in three years, it implies an 18% revenue growth rate. That's in the ballpark of last year's heady showing, and if margins continue to improve and its valuation remains constant, you have a proven producer that is more than likely to outperform the market over the next few years.

If you wonder why IBM (NYSE: IBM) got out of the box business, or how the operating system and chipmaker duo of Microsoft (Nasdaq: MSFT) and Intel (Nasdaq: INTC) can be such poor proxies for a personal-computer industry that continues to grow, just look to Dell, the only bellwether in that niche worth noticing these days. And Dell is ringing that bell loudly and with aplomb.

Want to learn more?

• Read about Dell's healthy fiscal 2005 showing.
• Yes, $1,000 invested in Dell in 1988 would have grown to nearly $400,000 today.
• Talk it up with Foolish community members in the Dell discussion board.

Longtime Fool contributor Rick Munarriz has no problems with the mixed marriage of his HP desktop projecting on his Dell monitor. He does not own shares in any of the companies mentioned in this story. The Fool has a disclosure policy. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early.