Dell revises earnings up on strong global sales

Dell, the world's largest personal computer maker, yesterday shook off concerns about tepid IT spending by raising its fiscal second-quarter earnings guidance, citing strong growth in business outside the US.

The company, which employs more than 4,000 people in Ireland now expects earnings for the quarter to July 30 to be 31 cents per share, up 29 per cent from a year ago and a 2 cents improvement on Dell's previous guidance. Analysts had expected earnings of 29 cents for the quarter, according to Thomson First Call.

The group's revised outlook came the day after research groups IDC and Gartner found that Dell continued to outperform rival Hewlett-Packard, as the worldwide PC market grew about 15 per cent in the second quarter. IDC said Dell had a global market share of 18.3 per cent, against 15.7 per cent for HP.

The research groups said recent technology jitters did not appear to have affected the PC market, which has been buoyed by digital media applications for consumers as well as corporate PC replacement programmes.

"Despite warnings from some sectors of the information technology industry, the recovery seems to be holding steady for now," said Mr Roger Kay, PC analyst at IDC.

Mr Charles Smulders, Gartner analyst, said his firm's monthly survey of IT decision managers showed that US corporate sentiment towards PC hardware spending remained positive during the quarter, with companies spending as planned.

However, Dell did not raise its second-quarter revenue estimate of $11.7 billion, saying that higher earnings would stem from higher operating profitability and a lower global tax rate.

Mr Kevin Rollins, who took over yesterday from founder Mr Michael Dell as chief executive, said the company was seeing robust sales of enterprise systems and services, gains in markets outside the US, and shipments to US small and medium-sized business customers.

Ms Laura Conigliaro, analyst at Goldman Sachs, said the company's gross margins appeared to be moving up due to stronger corporate sales. Mr Ben Reitzes, analyst at UBS, thought that Dell's ability to boost sales in Europe and other international markets appeared to be contributing to a lower tax rate. Results for Dell's second quarter are expected on August 12. It was up almost 2 per cent to $35.48 at mid-day in New York.