Dell's Earnings Beat Wall Street, But Still Down

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Dell's quarterly earnings were better than Wall Street forecast, but a declining PC market hurt the No. 3 PC maker. Net income for the second quarter dropped 72 percent to $204 million from $732 million the previous quarter. Revenue was flat compared with the prior year, coming in at $14.51 billion and beating forecasts of $14.18 billion.

The bright spot for Dell was its enterprise solutions business, which saw an 8 percent boost in revenue to $3.3 billion. Dell reported its PC division saw a 5 percent decline in revenue to $9.1 billion, its desktop revenue increased 1 percent and its mobility revenue was down 10 percent.

"These numbers show exactly why Michael Dell wants to take his company private," said Roger Kay, principal analyst at Endpoint Technologies Associates. With its legacy PC business in decline and its enterprise solutions business up, said Kay, it bolsters Michael Dell's case that the company needs to be able to focus on new business and not the legacy PC business.

[Related: Lenovo Earnings Soar As Tablet, Smartphone Sales Beat PCs]

"In a challenging environment, we remain committed to our strategy and our customers, and we're encouraged by increasing customer interest in our end-to-end solutions offerings and continued growth in our enterprise solutions, services and software businesses," said Brian Gladden, Dell CFO, in a statement.

Dell's challenges are great. Worldwide PC shipments are down 11 percent, according to market-research firm IDC. Dell also faces headwinds as Michael Dell and financial partner Silver Lake attempt to take the company private in a $24.4 billion leveraged buyout.

Dell, Round Rock, Texas, had moved up its earnings report a week and said it could not provide a financial outlook because of its pending buyout deal.


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