Old story, new quarter: Dell wows em' again

It's almost become boring unless you're a Dell shareholder but the PC giant shattered analysts' estimates once again in its second fiscal quarter, returning a profit of $346 million, or 50 cents a share, on sales of $4.3 billion.

It's almost become boring unless you're a Dell shareholder but the PC giant shattered analysts' estimates once again in its second fiscal quarter, returning a profit of $346 million, or 50 cents a share, on sales of $4.3 billion. First Call consensus expected a profit of 46 cents a share.

Dell (Nasdaq:DELL) shares fell 1 to 109 9/16 ahead of the earnings report but quickly shot up to 113 in after-market trading.

Not only did Dell beat the Street estimate, but it hurdled the whisper number of 49 cents a share winding its way through Wall Street Tuesday afternoon.

As if the stellar earnings report weren't enough, Dell's board of directors declared a 2-for-1 stock split. The split will be issued to shareholders of record as of Aug. 28 and is the company's second 2-for-1 split this year.

"Our sustained growth and solid performance across all segments and regions continue to underscore the strength and efficiencies of our direct business model," said chief executive Michael Dell in a prepared release. "We believe that our performance positions us as No. 1 in profitability, revenue growth and unit growth among major systems companies worldwide."



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The $4.3 billion in sales represents a 54 percent improvement versus the year-ago period when it reported sales of $2.8 billion. The $346 million profit is a 72 percent jump from the second quarter of fiscal 1998 when it earned $214 million, or 29 cents a share.

Gross profit margins increased to 22.7 percent from 22.2 percent in the year-ago quarter.

"Dell has just done things right," said Joe Bankan, an analyst at the Gartner Group. "Their solid earnings are a direct result of their direct-sales model. We're running out of reasons to warn people against buying this stock."

Last quarter, it made $305 million, or 44 cents a share, on sales of $3.9 billion. In the year-ago quarter, it pocketed $214 million, or 29 cents a share, on sales of $2.8 billion.

Nineteen of the 29 institutional investment firms following the stock rate it as either a "buy" or "strong buy."

Dell shares closed up 4 15/16 to 110 9/16 Monday. The stock hit a high of $118 in July after falling to 35 in November.