Dell Inc, the world's second-largest personal computer maker, said on August 30 its quarterly profit rose a higher-than-expected 46 percent as it benefited from lower component costs. But Dell predicted there would be smaller second-half declines in the cost of components such as disk drives and microprocessors, crimping its profits.
It also delayed resuming stock buybacks until after it files overdue financial reports with regulators in early November. Dell shares rose less than 1 percent in after-hours trading following the earnings report, having closed up 60 cents, or 2.2 percent, at $28.46. The stock is up 7 percent this year.
Operating profit margin slipped to 6 percent from 6.5 percent in the three months ended May 4. But the margin gained nearly 2 percentage points from the year-earlier period, when growth was slowing and profit margins were shrinking.
"It's quite a different company" from a year ago, said Kim Caughey, vice president and senior analyst at Fort Pitt Capital Group, which oversees about $1.2 billion of investments, including Dell shares.
"Dell is definitely a beneficiary of quickly dropping component prices," Caughey added. "They are also trying to set achievable targets for themselves."
Net income in Dell's fiscal second quarter increased to $733 million, or 32 cents per share, from a reported $502 million, or 22 cents per share, a year ago. Revenue rose to $14.77 billion from a reported $14.1 billion a year earlier.
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