Dell shares rise as the computer maker smashes first-quarter estimates

Computer hardware giant Dell technologies ( DELL ) crushed Wall Street estimates for its fiscal first quarter, although guidance was light. Dell shares rose on Friday.


The Round Rock, Texas-based company late Thursday said it earned an adjusted $1.31 a share on sales of $20.92 billion in the quarter ended May 5. Analysts polled by FactSet had expected Dell earnings of 86 cents per share on sales of $20.27 billion. On a year-on-year basis, however, Dell’s earnings fell 29% while sales fell 20%.

“We have performed well against a challenging economic backdrop,” said Chuck Whitten, Dell’s co-chief operating officer, in a press release. “We maintained pricing discipline, reduced operating costs, and our supply chain continued to perform well after normalizing ahead of the competition.”

Dell’s Infrastructure Solutions Group reported $7.6 billion in sales, down 18%. The group sells servers, storage and network equipment. Meanwhile, the company’s Client Solutions Group had sales of $12 billion, down 23%. The division sells desktop and laptop PCs.

Dell shares rise after report

Better-than-expected commercial PC sales and improved profit margins drove Dell’s pace in the first quarter, Evercore ISI analyst Amit Daryanani said in a note to clients. He reiterated his outperform rating on Dell shares and raised his price target to 60 from 55.

In morning trading on the stock market today, Dell shares rose 5.2% to 47.82.

For the current quarter, Dell forecast earnings of $1.10 per share on sales of $20.7 billion. It is based on the midpoint of the guide. Wall Street reported earnings of $1.16 per share on sales of $21.19 billion in the fiscal second quarter. In the same period last year, Dell earned $1.68 per share on sales of $26.4 billion.

“Customers are cautious and deliberate in their IT (information technology) spending,” Whitten said on a conference call with analysts. “We continued to see soft demand across our key industries, all regions, all customer sizes and most verticals.”

Dell surprised Wall Street by releasing its earnings report an hour before the market closed on Thursday. It ended the regular session on Thursday up 1.5% to 45.47.

The Dell stock is on the list of IBD Tech Leaders. Furthermore, it has an IBD Composite Rating of 88 out of 99, according to IBD Stock Checkup.

Follow Patrick Seitz on Twitter at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.


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