In contrast to Hewlett Packards’s (ticker HPQ) recently reported financial results, things are looking up for Dell (ticker DELL). The financial results for their most recent fiscal quarter were announced yesterday and show marked improvement over recent quarters as net profit nearly tripled over their year ago quarter as the computer maker benefited from favorable component costs, strong corporate demand and rising sales of its higher-margin products.
Dell said consumer demand for personal computers was sluggish, a trend that weighed on low-end “netbook” computers as buyers looked instead to tablet computers, like Apple Inc.’s iPad. To offset the slowdown, the company is focusing on more profitable products, such as services, data storage and software. Dell’s results come as the company weans itself off PCs, which have slim margins, and acquires its way into higher-margin services businesses. Dell purchased Perot Systems, a health-care information services company, two years ago and has added other software and hardware makers as it tries to offer a richer array of products.
For the quarter ended April 29, Dell reported a profit of $945 million, or 49 cents a share, up from $341 million, or 17 cents a share, a year earlier. Excluding acquisition-related charges and other items, adjusted earnings rose to 55 cents a share from 30 cents. Revenue rose 1% to $15.02 billion. In February, the company projected a “slight sequential decline in revenue” from the fourth quarter’s $15.69 billion. Gross margins widened to 22.9% from 16.9%.
The encouraging news and improving financial performance are being rewarded by the marketplace. Shares of Dell have been trending up the past couple of months and currently trade at $16.67, up nearly 5% from their $15.90 close yesterday.
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