Dell Inc.'s quarterly earnings and margins blew past Wall Street's expectations as component costs slid and corporations replaced aging technology, propelling its shares 6 per cent higher.
Dell, which is trying to shed a reputation for specializing in low-margin computers, still pulls in most of its revenue from selling personal computers. It has benefited from a surge in spending as businesses of all sizes spend again on equipment after two years of recession.
Shares of Round Rock, Texas-based Dell leapt nearly 6 per cent to $14.73 (U.S.) each after hours, following a brief trading suspension, from a regular Nasdaq close of $13.91.
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The No. 2 PC maker reported a net profit of $927-million, or 48 cents a share, in the fiscal fourth quarter ended Jan. 28, up from $334-million, or 17 cents a share, in the year-ago period.
Excluding items, Dell earned 53 cents a share, beating the average analyst estimate of 37 cents a share, according to Thomson Reuters I/B/E/S.
Its non-GAAP gross margin came in at 21.5 per cent, well ahead of analysts' estimate of 18.6 per cent. Revenue rose 5 per cent to $15.7-billion, matching Wall Street's target.
For fiscal 2012, Dell expects revenue growth of 5 to 9 per cent, and non-GAAP operating income growth of 6 to 12 per cent.
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The quarterly results offered affirmation of Dell's continuing efforts to turn itself around and boost profitability.
Dell is waging an uphill battle to diversify its revenue base: it wants to become a larger player in the data centre equipment market, a provider of IT services, and gain a toehold in the fast-growing mobile space with tablets and smart phones.
But it faces stiff competition from the likes of International Business Machines Corp., Hewlett-Packard Co. and Apple Inc.