Dude! Dell's Profits Jump 29%

Dell Inc.'s (Nasdaq: DELL) second quarter profits rose 29 percent thanks to strong server sales and a pickup in its overseas business, the company reported today.

Compared to the more disappointing figures reported by Hewlett-Packard Co. (NYSE: HPQ), Dell's numbers encouraged investors and its shares rose $0.95 (2.87%) to $34.07 in after hours trading. Meanwhile, HP's shares reached a 15-month low of $16.95 (see HP Storage Slammed).

The company reported a profit of $799 million, 31 cents a share, on revenues of $11.7 billion for its second quarter of fiscal 2005. That result, which was in line with Wall Street's expectations, compares favorably to the $621 million in profits, 59 cents a share, on revenues of $9.8 billion that it reported a year ago.

Dell's sequential numbers improved as well. In its first fiscal quarter, Dell recorded a $731 million profit, 28 cents a share, on revenues of $11.5 billion.

"We feel fairly bullish about our business," with double-digit revenue growth in all categories and markets, CEO Kevin Rollins said. "In the U.S., as I've said now for three quarters, steadily the market continues to improve. I think what this points out is that the market should not value every technology, should not value every sector, should not value every company the same way."Revenue for servers and storage was 22 percent of the overall figure, matching the company's previous record, and helping contribute to the $700 million added in the quarter to a cash and investments bundle of $11.8 billion, officials said. Server shipments rose 44 percent, while storage revenue grew 60 percent. Software and peripherals revenue increased 31 percent -- Dell expects to sell five million printers this year, it said.

Dell says it expects third quarter revenues of about $12.5 billion with earnings of $0.33 a share. Analysts expect Dell to earn 32 cents a share on revenues of $12.5 billion in the same period, according to Reuters Research.

Dell also took time in the quarter to buy back more than $2 billion of its own stock, Rollins said. Overseas, much of the revenue gains were sales taken away from archrival HP, he added.

Evan Koblentz, Senior Editor, Next-Gen Data Center Forum