Computer maker Dell Inc said on Thursday its first-quarter net income rose 52 percent, helped by sales of computers to businesses and technology services to public-sector customers.
However, Dell’s gross profit margin dropped from a year ago, and the company said certain PC components are likely to remain in short supply. Investors sent shares down in extended trading.
For the Feburary-through-April quarter, Dell’s net income rose to US$441 million, or US$0.22 per share, from US$290 million, or US$0.15 per share in the same period last year.
Excluding certain items, Dell said earnings totaled US$0.30 per share, US$0.03 more than Wall Street analysts were expecting, according to a Thomson Reuters survey.
Dell’s revenue rose 21 percent to US$14.9 billion, more than the US$14.3 billion analysts expected.
The majority of Dell’s business comes from selling computers and other hardware to companies and large organizations. It also has a smaller technology services division, expanded with a US$3.9 billion acquisition of Perot Systems last year.
RECESSION
Dell, the world’s third-largest PC maker behind Hewlett-Packard Co and Taiwan’s Acer Inc (宏碁), and much of the technology industry fared poorly during the worst of the recession, when businesses stopped spending to upgrade their systems and consumers flocked to the least expensive, and least profitable, PCs.
Dell’s report on Thursday echoed what its larger competitor, Hewlett-Packard Co, said on Tuesday, and what industry research groups published last month: Corporations were replacing aging servers and other behind-the-scenes technology first, and were starting to buy new PCs for employees.
Dell said revenue from large business customers jumped 25 percent to US$4.2 billion in the latest quarter. Revenue from small and medium businesses increased 19 percent to US$3.5 billion.
Brian Gladden, Dell’s chief financial officer, said during a conference call that companies’ desire to upgrade employee computers to Microsoft Corp’s latest operating system, Windows 7, will fuel sales of new Dell computers, since less than 5 percent of Dell’s customers have upgraded so far.
Researchers from IDC and Gartner Inc saw consumers flocking to inexpensive laptops during the quarter, as well as desktops where the guts of the computer are stashed in the monitor. Dell said its consumer business grew 16 percent in the quarter to US$3.2 billion in revenue.
Morningstar Inc analyst Michael Holt recommended taking growth rates with a grain of salt.
“This point last year was a very difficult time across the industry,” Holt said.
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