Dell exceeds expectations

Michael Dell says the PC maker will continue its transformation agenda

Lower manufacturing costs and higher selling prices for disk drives, microprocessors and other components have boosted PC maker Dell’s second quarter profits.

Dell has increased overall sales from $14.1bn (£7bn) last year to $14.8bn (£7.3bn), above average market expectations of $14.6bn (££7.2bn). Profits are also up, from $502m (£249m) to $733m (£364m).

The figures are preliminary because Dell is restating prior statements following an audit of its accounts.

Sales were driven by strong desktop sales, which topped $5bn (£2.5bn). Mobile products such as laptops generated $3.9bn (£1.9bn). Server revenue reached $1.6bn (£793m), making Dell the leading server vendor in the US.

Dell chief executive Michael Dell said the company would continue its transformation agenda, which includes the cutting of 10 per cent of staff to reduce costs.

‘While our results demonstrate we have made progress against our goals, we are still in the early stages of transforming our company’s structure, costs and operations,’ he said.

Dell said it expects the decline in component costs to slow in the second half of the year, which will lead to reduced profits.

Dell’s preliminary results must be viewed with caution, said Ovum analyst Ian Brown, because of its intention to restate four years’ worth of financial statements.

‘In the light of that caution, it seems that Dell is making steady progress in its attempt to get back to its winning ways,’ he said.