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Dell Breaks Forecasts But Pleases Customers

By: David Utter

Preliminary results for Dell's third quarter have the company exceeding analyst results, but investigations into Dell financial practices have kept the mood from being too celebratory in Round Rock.

Dell Breaks Forecasts Amid InquiryBoth the Securities and Exchange Commission and an internal audit committee have been combing through Dell's (DELL) accounting books for more evidence of improper activity. That investigation has been taking place since August 2005.

Dell did not file a 10-Q with the SEC for its second quarter, and they announced today they will not file one for the third quarter either, due to the investigation. CFO James Schneider has previously commented that the SEC won't find anything that would impact Dell's financials negatively.

The numbers they reported, revenue of $14.4 billion, operating income of $824 million, and earnings per share of 30 cents; analysts surveyed by Thomson First Call offered an average estimate of 24 cents per share.

Dell ended the quarter with $11.6 billion in cash and investments, and noted they only spent $335 million on repurchasing 15 million shares after suspending the stock repurchase program in mid-September.

As Dell shifted focus to more profitable products, their line of mobility products grew 17 percent in revenue to $3.9 billion. Desktop product revenue dropped 5 percent, still good enough for $4.7 billion in revenue.

Customer service, an area where Dell has been vilified for a host of issues, has been improving according to the company. They have sought to resolve customer issues with the first customer contact, aided by increasing the number of agents handling support issues.

Dell said it has lowered average hold times from 9 minutes to 3 for US customers, and lowered the number of call transfers needed to aid customers by more than 30 percent.


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