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Dell beats quarterly forecasts as notebook PC sales jump

From the Associated Press

Dell Inc. said Thursday that its profit and sales grew in its fiscal first quarter, beating Wall Street expectations and signaling that the computer maker’s turnaround effort may be working.

For the three months that ended May 2, Round Rock, Texas-based Dell Inc. earned $784 million, or 38 cents a share, up from $756 million, or 34 cents, a year earlier. Revenue increased 9% to $16.08 billion.

On average, analysts surveyed by Thomson Financial expected profit of 34 cents a share on sales of $15.68 billion.

The company said strong growth of commercial and consumer offerings and lower operating costs as a percentage of sales helped results.

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Dell shares rose 12 cents Thursday, closing at $21.81 before the quarterly results were released. In extended trading, the shares jumped $2.16, or 9.9%, to $23.97.

Dell is trying to cut costs by $3 billion while chasing Hewlett-Packard Co. in worldwide shipments of personal computers, a category it once led.

Dell still leads in U.S. PC sales, according to technology research firms IDC and Gartner Inc., but that could make Dell more vulnerable to a slowdown in the U.S. economy.

Chief Financial Officer Donald J. Carty told reporters that U.S. businesses “are holding back from spending” on desktops but that sales of servers and data-storage equipment were healthy.

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The company reported that worldwide notebook computer shipments rose 43% from a year ago. Carty attributed the increase to a continuing demand shift from desktops to notebooks and Dell’s gaining a greater share of the category.

On the cost side, Carty said the company cut 7,000 jobs from a year ago, including 3,700 in the last quarter, while adding about 2,700 employees through acquisitions.

Founder and Chief Executive Michael Dell said last month that the company would cut more than its earlier goal of 8,800 jobs. He pledged to slash costs by $3 billion over several years to boost profit.


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