[ad_1]
(Reuters) – Dell Technologies Inc (DELL.N) beat Wall Street's earnings estimates on Thursday, helped by increased demand for desktops, as well as a focus on more profitable contracts within its server unit in China, bringing the company's shares in 9% increase in prolonged negotiation.
FILE PHOTO: The logo of Dell Technologies Inc. is displayed on a floor screen of the New York Stock Exchange (NYSE) in New York, United States, January 10, 2019. REUTERS / Brendan McDermid
The PC maker sees a drop in demand in all industries in China in the context of a growing Sino-US trade war, but the company's focus on large and selective contracts in the Asian country has allowed to earn "higher margin dollars" in a declining market.
This allowed the company to forecast adjusted earnings per share for the full year of $ 6.95 to $ 7.40, compared to $ 6.42, according to analysts, according to Refinitiv's IBES data.
The company said it was working to increase product prices, including desktops and workstations, to offset the impact of additional 5% tariffs as of September 1 on Chinese products.
"Our costs will increase and we will have to change our prices," said Jeffrey Clarke, chief operating officer, during a conference call with analysts.
Sales of the company's server business fell 7% to $ 8.6 billion, but operating income rose 4% to $ 1.05 billion.
According to Dell, server orders outside China grew 1% in the second quarter and the company hopes to gain market share in the current quarter in North America and Europe, the Middle East and Africa (EMEA).
The company recorded a 6% increase in revenue in the client solutions business, including desktop computers, notebooks and tablets, and branded devices. The operating profit of this unit more than doubled to $ 982 million.
Dell benefits from the increased sales of enterprise workstations and high-end personal computers for gaming.
The company returned to the stock market after a six-year hiatus last December after acquiring a stake in the VMware software company (VMW.N), in which he currently holds a controlling interest.
Dell's net profit was $ 4.51 billion for the second quarter ended August 2, compared with a loss of $ 461 million a year earlier.
Excluding items, the company posted earnings per share of $ 2.15, higher than the average estimate of $ 1.47 per analyst.
Total revenues increased 2% to $ 23.37 billion, exceeding the average analyst estimate of $ 23.24 billion.
Report of Neha Malara in Bengaluru; Edited by Maju Samuel and Shailesh Kuber
[ad_2]
Source link