Washington, August 28: Computergiant Dell’s second-quarter profit fell 22 per cent however was better-than-expected and said revenue should rise through the second half of the year.
Shares of the world’s second largest PC maker rose 7 per cent on Wall Street overnight.
Revenue fell 22 per cent to $US12.8 billion ($15.2 billion), but came in ahead of Wall Street’s estimate of $US12.6 billion.
The company reported a net profit of $US472 million, or 24 cents a share, in its second quarter ended July 31, down from $US616 million, or 31 cents a share, in the year-ago period.
Excluding items, the company posted a profit of 28 cents a share, beating analysts’ average estimate of 23 cents a share.
Analysts credited better-than-expected margins with the surprising results, after Dell previously warned that higher component costs and a competitive pricing environment, among other factors, would eat into margins.
But Dell reported gross margins of 18.7 per cent, thanks to what it called “disciplined” pricing as well as an increase in sales from the first quarter. Wall Street had expected 17.7 per cent.
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Dell also said if current demand trends continue, it expects revenue for the second half of the year to be stronger than the first half.
While Dell’s shipments rose 10 per cent in the second quarter, it still trails HP in global PC shipments and is feeling the pressure from the third largest player Acer, which is growing quickly thanks in part to strong netbook sales.
But Dell is the top PC vendor in the US, where demand has been stronger than other regions such as Europe. Dell said that it expects IT spending to improve first in the US.
It also said that in the current quarter, it sees seasonal demand improvements from the consumer and US Government businesses. But it added that the quarter is also generally a period of slower demand from large commercial customers in the US and Europe.
Shares of Dell closed up 6.7 per cent at $US15.65 on Nasdaq. The results were released a few minutes before the markets closed.
—Agencies