World personal computer king Dell
Revenue increased 16% compared with last year's first quarter, helped significantly by a 21% increase in sales outside the U.S. (which are now 42% of total sales). Net income shot up 28% to $934 million, and earnings per share increased 32% to $0.29. Since these results met analyst expectations, there is little to get excited about here.
Computer industry analyst Gartner Group
How strong is Dell's PC business? Dell continues to build its PCs in the U.S. -- and grow. IBM
Recording a 30% increase in revenue over the year-ago quarter was Dell's Enhanced Services operation. Gartner Group recently ranked Dell No. 1 in hardware service revenue in the U.S. and No. 4 worldwide. This business has grown to 8% of quarter sales -- up 1% (almost 7% of sales for Q1 2004, 8% of sales for Q1 2005) from the year-ago quarter.
Here are two more savory morsels comparing this quarter with the one a year ago. Operating margins increased 0.4% to 8.8%. Even better, cash and short-term investments increased from $5.3 billion (at the same time last year) to $9.8 billion.
Dell is a golden goose. With only $504 million in debt and a booming business, you would expect the stock to be strong, right? Guess again. This Motley Fool Stock Advisor recommendation has seen its stock rise about 6% over the last 52 weeks.
But long-term investors will notice that analysts expect earnings to rise 24% this year and 17.5% next year -- pricing the stock at 20.7 times 2006 earnings. That's a very reasonable price for a company that has proved, over the long term, that it can enter markets and profitably dominate them.
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