Growth in Asia and strong sales of notebook computers helped Dell Inc beat Wall Street expectations for first-quarter sales and profit.
That strong result pushed shares of Dell, the world’s second-largest seller of personal computers, up 9.9 percent in late trading on Thursday.
Now, investors will try to determine if the results were a one-term wonder or a sign that founder and CEO Michael Dell’s turnaround plan is working.
Notebook shipments jumped 43 percent in the first quarter from a year earlier. Dell had made them a priority, developing products for emerging markets, and the Round Rock, Texas-based company rang up more sales overseas than at home for the first time in the first quarter.
Revenue rose 19 percent in Asia and 15 percent in Europe, the Middle East and Africa, helping Dell overcome a weak US market, where businesses were cutting back on technology spending.
“Dell did relatively well, but it was against low expectations,” said Shaw Wu, an analyst with American Technology Research who rates the shares “neutral.”
They rose US$0.12 on Thursday, closing at US$21.81 in regular trading before the results were released, then jumped US$2.16 to US$23.97 in late trading.
Still, the results added to the sense that technology spending “is turning out a little better than expected,” Wu said.
Much of that strength has come from overseas. Dell, which is more dependent on US sales than Hewlett-Packard Co (HP), sees US business customers “holding back from spending” on desktops, chief financial officer Donald Carty said.
He added that US companies may continue to defer technology spending into this summer.
Dell trails HP in worldwide PC shipments but leads in US sales, technology research firms IDC and Gartner Inc said, but that could make Dell more vulnerable to a slowdown in the US economy.
For the three months ended on May 2, Dell earned US$784 million, or US$0.38 per share, up from US$756 million, or US$0.34 per share, in the same period last year. Revenue rose 9 percent to US$16.08 billion.
On average, analysts surveyed by Thomson Financial expected a profit of US$0.34 per share on sales of US$15.68 billion.
Michael Dell, who returned to the chief executive’s job in January last year after the company floundered, said the company was “executing on all points of our strategy to drive growth in every product category and in every part of the world.”
He told analysts on a company conference call on Thursday that the strong Asia sales were partly due to a 140 percent surge at 1,800 stores in China that sell Dell machines. By early August, he said, Dell will be in 3,500 Chinese stores.
But skeptics might said — as some analysts on the call did — that Dell’s strong first quarter was helped by the weak dollar and unusually sharp job cuts, which might be more difficult to repeat.
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