Dell's income surges as it overcomes slump to beat rival HP again
Thursday May 19 2011
DELL, which employs more than 1,000 people in Limerick and Dublin, rose 6.7pc yesterday after its profit topped analysts' estimates, marking the second straight quarter that the company's results outshone those of rival Hewlett-Packard.
Net income surged to $945m (€662m), or 49c a share, from $341m, or 17c, a year earlier, Dell said. Excluding certain costs, earnings per share were 55c in the period, which ended on April 29. Analysts estimated 43c.
Dell's emphasis on business customers, bolstered by an expansion into corporate data centres, is helping it withstand a slump in demand.
A slowdown in home computer sales has hit industry leaderHewlett-Packard, which cut its annual sales forecast earlier on Tuesday. While Dell also saw its consumer revenue drop, it said it was able to squeeze more profit out of each sale.
"They executed much better than expected despite strong headwinds," said Shaw Wu, an analyst at Sterne, Agee & Leach in San Francisco. Dell gets about 20pc of sales from consumers, compared with about 30pc at Hewlett-Packard, said Wu, who has a neutral rating on Dell shares.
Dell rose in New York trading, in contrast with HP, which lopped $1bn from its full-year sales forecast, predicting revenue of $129bn to $130bn. Excluding some costs, earnings will be at least $5 a share, Palo Alto, California-based Hewlett-Packard said.
The divergence in performance is seen as a turning point for Dell, which has lost personal-computer market share to Hewlett-Packard and suffered a worse stock performance every year from 2005 to 2009.
"Dell a few years ago was a gross underperformer," Wu said. "You're seeing a role reversal."
Dell said operating income will increase 12pc to 18pc this year. When the company last reported its earnings in February, it predicted 6pc to 12pc.
It reiterated its full-year sales growth forecast of 5pc to 9pc , indicating revenue of at least $64.6bn.