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Dell Inc. posted a 21-per-cent jump in third-quarter profit that met expectations Thursday as sales surpassed the $10-billion (U.S.) mark.

Looking ahead, the Round Rock, Tex.-based computer giant predicted sales, which topped targets in the third quarter, will do so again in the current period.

The company accidentally posted part of its results on the company Web site shortly before 3:30 p.m. EST, prompting it to release it on the business wire shortly after. It normally reports after North American markets close.

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In the August to October quarter, Dell said it earned $677-million or 26 cents a share, up from $561-million or 21 cents a share. Analysts were expecting Dell to post a profit of 26 cents a share.

Improved sales of servers and data storage systems drove the higher profit.

Third-quarter sales climbed 16 per cent to $10.6-billion from a year-earlier $9.14-billion and just above analysts forecasts of $10.54-billion.

Shares of Dell slid 36 cents or 1 per cent in extended trading Thursday, after closing at $35.64. The stock has gained 33 per cent this year and is trading at nearly 40 times its share earnings.

Turning to the key holiday fourth quarter, Dell forecast shipments will be up 25 per cent from a year earlier. The company said it expects revenue of $11.5-billion and per share earnings of 28 cents in the fourth quarter, which ends in January.

Analysts expect Dell to post fourth-quarter sales of $11.23-million and a profit of 28 cents a share, meaning the company will exceed the Street's sales target.

On a conference call with analysts Dell Chief Financial Officer Jim Schneider said the company is "seeing a little bit better capital spending" from businesses on technology.

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Dell has lowered its operating costs and reduced its prices, stealing market share from rivals such as Hewlett-Packard Co. and International Business Machines Corp. It recently started selling consumer electronics such as digital music players and flat panel televisions.

On Thursday, the company said it gained 1.5 per cent of the global market share during the third quarter.

Dell said its global server shipments rose 30 per cent in the quarter, while sales of external storage systems rose 68 per cent. The company said its revenue from enterprise computing systems climbed 32 per cent from last year's levels.

Despite what it called "sharp industry price competition and slower than expected declines in component costs," Dell said its operating profit was 8.6 per cent of sales for the second straight quarter.

Shipments of notebooks jumped 31 per cent while sales of desktop computers were up 20 per cent, Dell said. Services revenue climbed 31 per cent to an annual run rate of $2.6-billion.

Sales from software and other peripheral products rose 26 per cent in the third quarter while Dell printer shipments climbed 70 per cent from the previous three months.

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About the Author
Personal Finance Web Editor

Roma Luciw is the Globe and Mail’s personal finance editor. She has worked at the Globe as a business journalist since 2001, covering stock markets, breaking news, and most recently anything that helps regular Canadians manage their own money. More


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