Computer hardware giant Dell Technologies smashed Wall Street's estimates for its fiscal first quarter, though its guidance was light. Dell stock rose on Friday.
The Round Rock, Texas-based company late Thursday said it earned an adjusted $1.31 a share on sales of $20.92 billion in the quarter ended May 5. Analysts polled by FactSet had expected Dell earnings of 86 cents a share on sales of $20.27 billion. However, on a year-over-year basis, Dell earnings dropped 29% while sales declined 20%.
"We executed well against a challenging economic backdrop," Chuck Whitten, Dell's co-chief operating officer, said in a news release. "We maintained pricing discipline, reduced operating expenses, and our supply chain continued to perform well after normalizing ahead of competitors."
Dell's Infrastructure Solutions Group reported $7.6 billion in sales, down 18%. The group sells servers, storage and networking gear. Meanwhile, the company's Client Solutions Group posted sales of $12 billion, down 23%. The division sells desktop and notebook PCs.
Dell Stock Rises After Report
Better-than-expected commercial PC sales and improved profit margins fueled Dell's first-quarter beat, Evercore ISI analyst Amit Daryanani said in a note to clients. He reiterated his outperform rating on Dell stock and raised his price target to 60 from 55.
On the stock market today, Dell stock rose 4% to close at 47.27.
For the current quarter, Dell forecast earnings of $1.10 a share on sales of $20.7 billion. That's based on the midpoint of its guidance. Wall Street was modeling earnings of $1.16 a share on sales of $21.19 billion in the fiscal second quarter. In the year-earlier period, Dell earned $1.68 a share on sales of $26.4 billion.
"Customers are staying cautious and deliberate in their IT (information technology) spending," Whitten said on a conference call with analysts. "We continued to see demand softness across our major lines of business, all regions, all customer sizes, and most verticals."
Dell surprised Wall Street by releasing its earnings report an hour before the market closed Thursday. It ended the regular session Thursday up 1.5% to 45.47.
Dell stock is on the IBD Tech Leaders list. Further, it has an IBD Composite Rating of 88 out of 99, according to IBD Stock Checkup.
Follow Patrick Seitz on Twitter at @IBD_PSeitz for more stories on consumer technology, software and semiconductor stocks.
