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Dell fiscal 1Q net income jumps 52 percent

Business Materials 21 May 2010 03:23 (UTC +04:00)
Computer maker Dell Inc. said Thursday its first-quarter net income rose 52 percent, helped by sales of computers to businesses and technology services to public-sector customers
Dell fiscal 1Q net income jumps 52 percent

Computer maker Dell Inc. said Thursday its first-quarter net income rose 52 percent, helped by sales of computers to businesses and technology services to public-sector customers, AP reported.

But 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 sharply in extended trading.

Dell said that from February through April, it earned $441 million, or 22 cents per share. In the same period a year ago it earned $290 million, or 15 cents per share.

Excluding certain items, fiscal first-quarter earnings were 30 cents per share. That was three cents more than Wall Street analysts were expecting, according to a Thomson Reuters survey.

Dell's revenue rose 21 percent to $14.9 billion, more than the $14.3 billion analysts were expecting.

The majority of Dell's business comes from selling computers and other hardware, software and technology services to companies and other large organizations. Last year Dell acquired Perot Systems, which provides technology services for hospitals and other organizations, to increase its revenue from the public sector.

Dell said revenue from large business customers jumped 25 percent to $4.2 billion in the latest quarter. Revenue from small and medium businesses increased 19 percent to $3.5 billion.

During a conference call, Dell's chief financial officer, Brian Gladden, said that large businesses were buying many more server computers than a year ago, but that they were still just beginning to replace employees' aging PCs. Consumers' interest in inexpensive computers had kept the industry afloat throughout the worst of the recession, even as businesses cut way back on spending. Dell's consumer business grew 16 percent in the quarter to $3.2 billion.

Dell's gross profit margin - the percentage of its revenue left after subtracting the cost of making its products - was 16.9 percent, down from 17.6 percent at the same time last year. In part, higher prices for components including memory and LCD screens were to blame, Gladden said. Dell's consumer PC business, which is less profitable than its corporate business, is also larger than it was a year ago.

Dell is the world's third-largest PC maker behind Hewlett-Packard Co. and Taiwan's Acer Inc.

Its earnings report came out after Dell stock fell 66 cents, 4.4 percent, to close at $14.32. In extended trading the shares fell 47 cents, 3.3 percent, to $13.85.

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