Dell bounces back with bumper profits

PC maker Dell appears to be on the road to recovery after posting higher than expected profits.

Dell earned just over $1 billion in profit during its fiscal third quarter, almost doubling the $577 million earned in the same quarter last year.

The profit boost is largely down to improved sales in the corporate market, where margins are higher than in the cut-throat consumer business. Dell’s large enterprise business increased by 27%, with companies increasingly replacing ageing fleets of desktop PCs, servers and networking equipment.

However, Dell’s consumer growth continues to be weak, with the company increasing its revenue by only 4% during the quarter. Dell’s hoping that a revamped product line-up – including devices such as the innovative Inspiron Duo and its range of Streak tablets – will help boost consumer sales, especially in the crucial Christmas quarter.

“I believe the third-quarter results are beginning to demonstrate that the strategy we have described to you over the past year is the correct one,” said chief executive Michael Dell.

One strategy that Michael Dell won’t be employing is a long-rumoured move to take the company back into private hands. When asked whether there was any prospect of the Dell boss buying his company back, chief financial officer Brian Gladden replied: “We have no plans to take the company private. Period.”

The impressive profits will help draw a line under a turbulent few years for Dell, which has suffered from tumbling profits, declining PC market share and financial controversies. Court documents released earlier this year revealed that during 2007, more than three quarters of Dell’s quarterly income was coming from so-called sweetener payments from Intel to keep rival AMD out of the PC maker’s product line-up.