Dell posts solid profit

No. 1 PC maker reports results that meet forecasts; sales guidance bullish; stock gains after-hours.

May 12, 2005: 4:49 PM EDT

SAN FRANCISCO (Reuters) - Dell Inc., the world's largest personal computer maker, said Thursday PC sales in April overcame weakness earlier in the quarter, fueled by strong growth in European markets and Japan.

The company's forecast for revenue in the current quarter was equal to or slightly above the average analyst forecast, and Dell (Research) stock rallied on the news.

Net income rose to $934 million, or 37 cents a share, in the fiscal first quarter ended April 29, compared with $731 million, or 28 cents a share, a year earlier.

Revenue rose 16 percent to $13.39 billion from $11.54 billion.

Analysts believe a heavy promotional push by Dell aimed at consumers and small businesses helped offset weakness that Dell officials had cited in February and March.

Wall Street was looking for Dell to report a net profit of 37 cents a share, up 32 percent from a year earlier, according to Reuters Estimates. Forecasts ranged between 36 cents and 37 cents, according to Reuters Estimates.

Analysts were looking for revenue of $13.42 billion on average. Forecasts were in a tight range between $13.37 billion and $13.50 billion. In April, Dell reaffirmed its prior outlook for $13.4 billion in revenue and earnings of 37 cents a share.

Dell expects revenue for the fiscal second quarter ending in July to increase between 16 percent and 18 percent, to a range of $13.6 billion to $13.8 billion, with earnings of 37 to 39 cents a share, CEO Kevin Rollins said in a statement.

That profit outlook was in line with current forecasts, but the revenue projection was equal to or slightly better than the average analyst forecast.

Shares of Dell, based in Round Rock, Texas, rose 7 cents to close at $36.61 on Nasdaq. They climbed about 2 percent in after-hours trading.