Dell Posts Higher Fiscal Second Quarter Profit

Early on Tuesday, Wall Street Journal reported that it expected PC maker Dell (News - Alert) Inc. to post a significant earnings-per-share gain when the company reports earnings results later that day. The analysts are predicting a big jump in second quarter profit as the PC maker gets big boost from the strong corporate and enterprise markets.

According to WSJ, based on a consensus survey by FactSet (News - Alert) Research, analysts are expecting Dell to post earnings of 49 cents a share, on revenue of $15.75 billion. For the year-earlier period, the company reported earnings of 32 cents a share, on revenue of $15.53 billion, reported WSJ journal.

Well, as per analysts expectations, Dell reported a strong second quarter financial results, primarily driven by enterprise solutions and services. Revenue in the quarter was $15.7 billion, up 1 percent over last year and 4 percent sequentially, according to Dell. In addition, the PC maker reported GAAP earnings per share of 48 cents, up 71 percent and non-GAAP EPS of 54 cents, up 69 percent.

According to Dell, vendor settlements resulted in approximately $70 million in benefit in the quarter that increased non-GAAP gross margins 50 basis points and non-GAAP earnings per share by 4 cents. Likewise, GAAP operating income reported was $1.1 billion, or 7.3 percent of revenue. Non-GAAP operating income was $1.3 billion, or 8.5 percent of revenue. Dell ended the quarter with a record high $16.2 billion in cash and investments and repurchased $1.1 billion in stock in the quarter, as per the financial results reported by the company.

In a note to the WSJ reporter Benjamin Pimentel, Citigroup analyst Richard Gardner said, "All signs point to another meaningful margin-driven EPS upside for Dell's July quarter."

Upbeat trends in the enterprise sector, which is about 30 percent of Dell's total revenue, and optimistic outlook in the small- and medium-sized businesses, which is 25 percent of total sales, are together offsetting weaknesses in Dell’s consumer business, noted Sterne Agee analyst Shaw Wu, wrote Pimentel.