Dell Earnings Meet Expectations

For the three months ended Aug. 2, Dell earned $501 million, or 19 cents a share, on $8.46 billion in revenue. That compared with a loss of $101 million, or 4 cents per share, in the year-ago quarter on revenue of $7.61 billion. That was in line with the consensus estimate of analysts surveyed by Thomson First Call, which had expected second-quarter earnings of 19 cents per share.

Revenue climbed 11 percent to $8.46 billion, but fell short of analysts expectations of $8.56 billion. Dell had predicted revenue of $8.3 billion last month during its shareholder meeting July 18.

Dell reported an 18-percent rise in worldwide shipments while the industry, excluding Dell, reported a 4 percent decline. Shipments of servers and workstations were up 20 percent, and those products together with storage systems accounted for 20 percent of revenue, the company said in a statement after the markets closed.

Shares of Dell fell a penny to close at $27.14 in regular trading on the New York Stock Exchange, but gained 8 cents in the extended session.

"In a tough market with slack demand, they continued to take market share. They're growing without the benefit of a growing market," said Barry Jaruzelski, managing partner of Booz Allen Hamilton, a management consulting firm.

CEO Michael Dell predicted the company would do even better in the third quarter, in part because of increased government spending.

He said he expects the increase in sales to come from a pickup in spending by government, businesses and an increase in sales in Europe and pre-holiday spending by consumers.

Dell also said he expected the company to begin selling PDAs and printers, but he would not say when the firm would have them ready for market.

"You'll see the announcement when we make it," Dell said.

"There's no doubt that Dell can do a competent job on producing and selling the printer hardware. What investors are still trying to get clarification on is Dell's strategy on the ink cartridges, where most of the profit comes from," said John Park, analyst with Independence Investment in Boston.

"Dell doesn't have retail outlets. It's all direct form the company," Park said.

Dell, best known for its personal computers, also sells servers, software and peripherals to consumers and corporate customers.

For the first half of the year, Dell earned $958 million, or 36 cents per share, compared with $361 million, or 13 cents a share, a year earlier. It had year-to-date revenues of $16.5 billion compared to $15.6 billion for a 6 percent increase.

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