Dell Inc. more than doubled its profit in the third quarter thanks to stronger sales to corporate customers and falling prices for computer components, the company said Thursday.
"We had a very good quarter with solid revenue growth and good profitability and cash flow," said Chief Financial Officer Brian Gladden .
The computer-maker made a profit of $822 million, or 42 cents a share, on revenue of $15.4 billion for the quarter ended Oct. 29. Revenue was up 19 percent from a year ago, while profit jumped 144 percent.
The company said it saw a richer mix of profits while keeping costs down and benefiting from the falling prices of components such as memory chips, storage drives and flat-panel displays.
Analysts were pleased with the profits, which were well ahead of estimates. Dell shares jumped almost 7 percent in extended trading, to as high as $14.58 a share.
"Revenues were light, but earnings were solid and profit margins were very solid," said Brian Marshall with Gleacher & Co.
"They hit gross margins out of the park," said Ashok Kumar with Rodman & Renshaw .
Gross margins for the company totaled 19.5 percent of revenue, compared with 16.6 percent in the second quarter. Analysts had criticized the company earlier in the year for disappointing gross margins, which are sales minus the cost of production.
Dell's strongest growth came in large corporate products and services, where revenue was $4.3 billion, up 27 percent from a year ago. Public sector revenue totaled $4.4 billion, up 20 percent, and small and medium-size business revenue totaled $3.7 billion, up 24 percent. Consumer sales totaled $2.9 billion, up 4 percent.
The company said it generated $913 million in cash in the quarter and ended with more than $14 billion in cash and short-term investments.
"Our strong results demonstrate that we are listening to customers and delivering what they want," said CEO Michael Dell.
The company said it expects to see continued strong growth in sales of desktop and notebook computers to large corporate customers.
It expects its revenue growth for the fiscal year ending next January will "track toward the mid-point of the 14-19 percent" projection made this summer.
For the first three quarters, the company made a profit of $1.7 billion, or 87 cents a share, on revenue of $45.8 billion. That compared with a profit of $1.1 billion, or 56 cents, on revenue of $38 billion for the same period of last year.
Gladden said Dell continues to make good progress with its infant business of making mobile Internet devices despite the abrupt departure of Ron Garriques , the head of that business, which was announced Wednesday. Garriques, a former Motorola executive who has worked at Dell for nearly four years, will receive more than $8 million in severance, bonus pay and consulting fees from the company over the next year.
"We are the pleased with the progress there," Gladden said.
The CFO also discounted repeated speculation about whether the company will go private, although he also said recently that the idea has been discussed at Dell.
"We have no plans to take the company private, period," he said.
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