A Dell sales representative talks to customers at a Dallas store.Lawrence Jenkins/Getty Images
Dell Inc. posted profits that blew past Wall Street forecasts and the No. 2 PC maker raised its fiscal 2012 outlook for operating income, citing expectations for a robust back-to-school season and strong government spending.
Dell's gross margin was 22.9 per cent in the quarter, above the average forecast of 20.35 per cent, driven by the strength in its enterprise business.
Revenue in the fiscal first quarter ended April 29 rose to $15-billion (U.S.) from $14.87-billion a year ago, but fell short of the average analyst estimate of $15.4-billion according to Thomson Reuters I/B/E/S.
Shares of Round Rock, Tex.-based Dell jumped 5 per cent in extended trading after closing down 0.63 per cent at $15.90. The shares were initial halted in after-hours trading.
The better-than-expected results are in sharp contrast to larger rival Hewlett-Packard Co.'s, which disappointed investors by cutting its profit outlook, sending its shares down over 7 per cent.
Dell still generates most of its revenue from selling personal computers but is moving to diversify its revenue base, given the weakened demand in the consumer PC market.
Dell wants to become a larger player in the data centre equipment market and gain a toehold in the fast-growing mobile space with tablets and smartphones, but faces stiff competition in those markets from the likes of International Business Machines Corp. and HP.
Dell reported a net profit of $945-million, or 49 cents a share, up from $341-million, or 17 cents a share, a year ago.
Excluding items, Dell earned 55 cents a share, handily beating the average estimate of 44 cents a share according to Thomson Reuters I/B/E/S.