Friday 24 November 2017

Dell forecasts beat analyst predictions

Ian King

DELL, the world's third-largest personal-computer maker, forecast third-quarter sales that beat analysts' estimates but its second-quarter gross margin fell short of projections.

Sales-percentage growth this quarter will be in the low single digits from last quarter, Dell said in a statement.

Gross margin excluding some items -- a measure of profitability -- was 17.2pc in the second quarter, missing the average 18pc predicted by analysts, according to Ashok Kumar, an at Rodman & Renshaw in New York.

Demand from companies and governments outside the US helped drive sales at the company's commercial division, chief financial officer Brian Gladden said in an interview. Rising costs of components squeezed profitability, he added. Under CEO Michael Dell, the company is trying to reduce its dependence on PC sales and build up a business that supplies computer services to government and corporations.

"There's a solid corporate refresh cycle," said Mr Gladden. "Global business was pretty strong outside the US."

Dell did see weakness in US consumer demand for PCs throughout the quarter, he said.

Second-quarter net income rose to $545m (€429m), or 28c a share, from $472m, or 24c, a year earlier.

Profit, minus some costs, was 32c a share, beating analysts' 30c estimate. Sales gained 22pc to $15.5bn, also exceeding predictions.

The company's move toward building a services business through acquisitions of companies such as Perot Systems "is going to take some time", said Kumar, who rated Dell shares "market perform", but doesn't own any himself.

Irish Independent

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