May 30, 2008 - 2:01 p.m.
NEW YORK (AP) - Dell Inc. finally gave investors something to gayety around, as its first-quarter results showed that its cost-cutting efforts may have being beginning to hire off, and strong notebook sales helped push profit and revenue above Wall Street's expectations.
Round Rock, Texas-based Dell's shares rose $1.63, or 7.4 percent, to $23.42 in afternoon mercantile Friday. In the past 52 weeks, the trunk has traded between $18.13 and $30.77.
Dell, once the world's largest computer maker, fell behind rival Hewlett-Packard Co. in 2006, though it silent leads U.S. PC sales. But it was strength in Asia and other parts of the world that helped the company make up with regard to the slumping U.S. market during the first quarter.
Still, analysts were cautious.
"Dell's next aspect of cost cutting, i.e. move to products with lower design costs, carries significantly higher execution risk than recent headcount reductions," wrote Thomas Weisel Partners analyst Doug Reid in a note to investors.
The company divide about 7,000 jobs last year, though it added 2,700 end acquisitions. It is planning to cut costs by $3 billion by 2011.
Reid called the quarter impressive, but believes the company may have a difficult time keeping the constituent of its cost-cutting efforts. He rates the stock "Market Weight."
Dell posted a 4 percent jump in its quarterly gain, to $784 million, space of time revenue rose 9 percent, to $16.08 billion.
The analyst also noted that Dell's adjusted revenue growth rate of 3 percent is under HP's growth scold of 4.5 percent for its latest quarter. The adjusted figures exclude circulation effects and acquisitions.
Shaw Wu of American Technology Research, meanwhile, called the quality of Dell's earnings "somewhat have no confidence in," with different one-time items that could pull earnings as low as 32 cents per share compared with the reported 38 cents — and analysts' average estimates of 34 cents. A Dell representative could not immediately be reached for commend early Friday afternoon.
Wu, who kept a "Neutral" rating on Dell's shares, said the key difference between Dell's latest have lodgings and the last one was that the company was able to translate its strong one growth into strong revenue.
But Dell's gross margin and average selling prices continue to be pressured, Wu wrote, also noting that the company's results came off lowered expectations.