Revenue was $14.38 billion, up 3.4% from $13.91 billion in the year earlier period. Dell said desktop revenue was $4.7 billion and shipments fell 5%, while laptop revenue was $3.9 billion and unit growth was 17% in the quarter.

The company had delayed the earnings report from last Thursday because of a Securities and Exchange Commission (SEC) investigation into its accounting procedures. Dell warned Tuesday the preliminary results could change and executives didn't hold a conference call to discuss the results.

Dell lost its position as the world's largest personal-computer seller position in the third quarter, according to market researchers IDC and Gartner.

Dell's US shipments fell 7.1 percent, while Hewlett-Packard had a 6.3 percent gain during the back-to-school season, researcher company Gartner Inc. said.

The fall in the US pushed down Dell's global market share to 16.1 percent, compared with a 16.3 percent share for Hewlett- Packard, said Gartner.

Investigation Update; Preliminary Results Subject to Change

As previously announced, the SEC and the Company’s Audit Committee are conducting investigations into certain accounting and financial reporting matters, including the possibility of misstatements in prior period financial reports, and the company previously received a related subpoena from the United States Attorney for the Southern District of New York.

Due to questions raised in connection with these ongoing investigations, the Company has not filed the Form 10-Q for its fiscal second quarter ended August 4, 2006 and does not expect to be able to timely file its Form 10-Q for the fiscal third quarter ended November 3, 2006.

As a result, all financial results, as well as the previously announced financial results for the second quarter, should be considered preliminary according to Dell, and are subject to change to reflect any necessary corrections or adjustments, or changes in accounting estimates, that are identified prior to the time the company is in a position to complete these filings. In addition, the preliminary results for the second and third quarters could be affected by any restatements of prior period financial statements that are required as a result of any conclusions reached by the investigations. No determination has been made as to whether restatements of prior period financial statements will be required.

The company said that it is not currently able to predict the extent or significance of any such changes, and those changes could materially affect the preliminary results reported herein, as well as the previously announced results for the second quarter.

Additional information about the investigations, as well as information about related private litigation, can be found in the Current Report on Form 8-K filed with the SEC concurrent with the issuance of this press release.

Summary of Third Quarter Results

In the quarter, the company achieved a better balance of liquidity, profitability and growth, which was driven by an improved mix of products worldwide. In addition, the company continued to focus its actions to strengthen product lines, particularly in the enterprise, improve customer experience, and accelerate growth outside the US.

Desktop to Data Center; Broadest Product Portfolio in Dell’s History

Dell began shipping two new PowerEdge servers featuring AMD Opteron processors, providing customers an additional choice for high-performance two-socket and four-socket systems. The company also launched the industry’s first standards-based Quad-Core processors for two-socket blade, rack and tower servers. Combined with the 9G servers launched last quarter with Intel Xeon 5100 series processors, Dell now provides the broadest selection of industry-standard servers in its history. In the quarter, server revenue was $1.5 billion on 12 percent unit growth.

In storage, revenue was $577 million and the company announced a five-year extension to its partnership with EMC.

In client systems, the company launched quad core processors on its XPS 710 Extreme desktop as well as on Dell Precision workstations. In addition, the company launched its 64-bit dual core Dimension and Optiplex systems, and Dell Latitude and Inspiron notebooks featuring AMD processors.

Mobility revenue was $3.9 billion on 17 percent unit growth. Desktop revenue was $4.7 billion on negative 5 percent unit growth. In both cases, growth was impacted by the company’s decision to focus on more profitable products.

In software and peripherals, revenue was $2.3 billion. Enhanced services revenue was $1.4 billion. The company’s new Platinum Plus offering drove an increase in premium service contracts year-over-year and the company now has more than 300 Platinum Plus customers.

Strong Unit Growth in APJ and Emerging Markets

In the Asia-Pacific and Japan region, revenue was $1.9 billion on unit growth of 23 percent, as the company gained 1.4 share points year-over-year. Led by 33 percent unit growth in China, Dell was also the fastest growing among the top five vendors in the region, growing at nearly three times the growth rate of the industry. In India, units were up 93 percent and to more efficiently serve the growth in this market, Dell plans to open manufacturing operations there early next year.

In Europe, Middle East and Africa (EMEA), where the company took a more balanced approach to pricing, revenue was $3.3 billion with unit growth of 9 percent. Dell also recently announced its second manufacturing location for EMEA to be located in Lodz, Poland, to provide more timely delivery to customers in Central and Eastern Europe.

In the Americas, revenue was $9.2 billion on unit growth of negative 4 percent. Unit growth was 37 percent in Brazil and 19 percent in Canada.

Customer Experience Improvement Led by "Resolve in One"

As previously announced the company is investing an incremental $150 million this year on its Customer Experience initiatives and is seeing signs of improvement in key external and internal indicators. By increasing the number of agents, average hold times for U.S. customers have been reduced from nine minutes to three minutes in the past year. In addition, the company has reduced call transfers by over 30 percent and has improved first contact resolution rates by 20 percent. “Resolve in One” reflects Dell’s goal to resolve issues to a customer’s satisfaction on initial contact.

Company Outlook

The company said that the actions it has taken to drive improved operating and financial performance long-term with a better balance of liquidity, profitability and growth are starting to take hold. However, in the near term, improvement in growth and profitability may not be linear due to a variety of factors, including the timing of continued investments in Customer Experience, global expansion, and new product introductions, as well as a muted seasonal uplift due to changes in the mix of product and regional profit. In addition, the fourth quarter of fiscal year 2006 included one extra week.

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