Dell’s higher desktop demand helped beating profit estimates

Dell’s higher desktop demand helped beating profit estimates


Dell Technologies Inc reported its second quarter results on Thursday beating the Wall Street profit estimates as demand for its desktop computers rose during the quarter and also company’s efforts in getting much lucrative contracts for its server business in China.

In the midst of escalating trade war between the United States and China, Dell is facing downtrend in demands across industries in China, but company’s strategy of focusing on selective larger deals in China helped it to earn higher margins in a market that is also facing an overall slower pace.

The beating results helped the company to forecast full-year earnings per share on adjustment basis that also came above the analysts’ estimates. Dell forecasted EPS of between $6.95 and $7.40 while analysts were estimating $6.42, according to IBES data from Refinitiv.

The PC maker, in order to offset the impact of additional 5% tariffs that become effective from Sep. 1 on imports from China, was also intending increasing the prices of its products including workstations and desktops.

During the reported quarter, company’s sales in server business dropped by 7% to $8.6 billion, but its operating income saw a rise of 4% to reach $1.05 billion.

Outside China orders for company’s server rose by 1% in the quarter and Dell is expecting getting more of the market share in current quarter in Europe, the Middle East and Africa (EMEA) region as well as in North America.

In the second quarter Dell’s revenue in client solution business of making desktop PCs, tablets, notebooks and branded peripherals jumped by 6%, while operating income in that unit increased two fold to $982 million.

Net Income rose to $4.51 billion in the reported quarter against loss of $461 million in year-ago quarter.

Dell posted earnings per share of $2.15 while analysts on average were in estimates of $1.47 per share for the same.

Dell succeeded to generate total revenue of $23.37 billion that increased by 2% and also beat the average analyst estimate of $23.24 billion.

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I handle much of news coverage for tech stocks, and occasionally cover companies in different sectors. In the past, I've written for other financial sites and published independent investment research, primarily on tech companies. I have a B.A. in Economics from Columbia University. I'm based out of San Diego, but grew up in Southern New Jersey. I play basketball and tennis in my spare time, am a long-time (and long-suffering) fan of Philadelphia's sports teams, and alternate daily between using an iPad Air, a Galaxy Note 3, and one or two Windows PCs.