PC maker Dell Inc said on Thursday that its net income for the latest quarter more than doubled as companies spent more to replace aging technology.
Dell’s earnings topped Wall Street’s expectations, and investors drove its shares up almost 5 percent after the results were announced.
Businesses of all sizes, plus government agencies and other public-sector customers, spent more with Dell in the quarter.
PHOTO: REUTERS
Large-enterprise revenue rose 27 percent to US$4.3 billion from a year ago, and small and medium-business revenue rose 24 percent to US$3.7 billion.
While networking gear maker Cisco Systems Inc recently reported unexpectedly slow growth in new orders from government customers, Dell said public-sector revenue rose 20 percent to US$4.4 billion.
However, Dell’s business with federal, state and local government accounts for just 9 percent of the public-sector business and 3 percent of the company’s overall revenue.
Revenue from consumers, Dell’s smallest customer segment in the quarter, increased 4 percent to US$3 billion.
In an interview, Dell chief financial officer Brian Gladden said the company expected to see similar “muted” growth through the holiday shopping quarter.
Desktops and laptops made up about 56 percent of Dell’s revenue in the quarter.
PCs are less profitable than Dell’s technology consulting services and other smaller slices of its business, but the company still managed to improve gross margins.
Dell said lower component costs helped margins in the quarter, as did “pricing discipline” — not cutting prices too deeply to attract buyers — and improvements in the supply chain. The company said it also passed on some deals that could have hurt margins.
For the current fourth quarter, Dell indicated that gross margin would not be as strong. During a conference call with analysts, Gladden said less-profitable consumer PCs would make up more of the computers sold in the quarter. He added that component prices were bottoming out and wouldn’t provide as much of a lift.
For the fiscal third quarter, which ended on Oct. 29, Dell’s net income jumped to US$822 million, or US$0.42 per share, from US$337 million, or US$0.17 per share. Revenue jumped 19 percent to US$15.4 billion from US$12.9 billion.
For the full fiscal year, which ends in January, Dell said that it expected revenue around the midpoint of its earlier guidance for a rise of 14 to 19 percent from last year. That would put fiscal 2011 revenue at about US$62 billion.
Gladden also shot down rumors that Dell was planning to go private.
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