Dell profits up but under target

Computer firm Dell has seen quarterly profits rise, helped by stronger laptop sales and lower costs for components.

Profits rose 27% to $766m (£371m) or 34 cents a share in the three months to 2 November, up from $601m (27 cents) a share in the same period in 2006.

Analysts said the numbers showed Dell was recovering but that it missed the average 35 cent a share forecast.

Faced with tough rivalry from Hewlett Packard, Dell has been trying to boost sales by selling at retail outlets.

Hewlett-Packard overtook Dell as the number one PC maker during 2006.

"We embarked this year on a long-term strategy to re-ignite growth," said Michael Dell, the firm's founder and chief executive.

He said the results showed "solid progress through investments in five key business priorities - consumer, emerging countries, notebooks, enterprise and small-medium business."

Brent Bracelin, an analyst with Pacific Crest Securities, said the earnings were roughly as expected after allowing for one-off expenses.

But he added: "The disappointment here is that you didn't see a follow-through of revenue upside to earnings upside....but the company is coming out of a two-year slump here and is still in turnaround mode."

Shares in the firm fell 7% in after hours trading. In May Dell outlined plans to sell personal computers through low-cost retailer Wal-Mart, marking a significant change for Dell, which had previously relied only on telephone, mail and internet sales.

Dell said US consumer business sales fell 6% however China, Brazil, Russia and India all saw strong growth.

According to Gartner, Dell shipped about 9.9 million computers worldwide during the quarter, while HP shipped 12.8 million.

The research firm puts Dell's share of the personal computer market at 14.4%, from 15.9% in the same quarter last year and less than HP's 18.6% stake.
(Source news.bbc.co.uk)