Driven by exceptionally strong sales, Dell Computer's first quarter profits soared 54 per cent to $305 million, with net revenues jumping 52 per cent to $3.9 billion.
The company said the results for the three months to 3 May establish Dell as the highest earner among PC companies and second in terms of worldwide sales, behind Compaq.
The results represent an emphatic endorsement of the direct business model, where Dell builds PCs only after they have been ordered, allowing them to hold minimal inventories of parts that soon become obsolete. The company had an average inventory period of eight days, up slightly from the previous quarter but significantly lower than Compaq.
This is a clear poke in the eye to those who sell indirectly - Dell earned more in the quarter than IBM, Compaq and Hewlett Packard put together.
Joanne Gray, Internet business manager at Dell UK, said the company is chasing Compaq hard. "We've got our eye on the number one spot," she said.
Split geographically, sales were strongest in Europe, up 62 per cent to $1 billion. Sales grew 50 per cent in the Americas to $2.6 billion and 35 per cent in Asia to $269 million.
Much of the momentum for growth during the period came from Internet sales, which currently exceed $5 million per day globally, of which Europe accounts for $1 million a day. The Texas based company wants 50 per cent of sales via the Internet by 2000 and is also looking to the Internet to increase efficiency further.
"Fifty per cent of calls that come into the customer care centre are to check order status. This is not conducive to high productivity and is an area in which we are looking to make more cost savings," said Gray.
Gray said that, by automatically updating all prices and status of orders on the Web site, she hoped to reduce the number of order status calls by around one-third, freeing staff to concentrate on more valuable tasks.
"Though really, there is no reason why all order checks shouldn't be done online," she added.
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