Personal computer maker Dell Inc. said Thursday that its net income for the latest quarter more than doubled as companies spent more to replace aging technology.
Dell’s earnings topped Wall Street’s expectations, and investors drove its shares up almost 5 percent after the results were announced.
Businesses of all sizes, plus government agencies and other public-sector customers, spent more with Dell in the quarter. Large-enterprise revenue jumped 27 percent to $4.3 billion from a year ago, and small-and-medium-business revenue rose 24 percent to $3.7 billion.
While networking gear maker Cisco Systems Inc. recently reported unexpectedly slow growth in new orders from government customers, Dell said public-sector revenue rose 20 percent to $4.4 billion. However, Dell’s business with federal, state and local government accounts for just 9 percent of the public-sector business and 3 percent of the company’s overall revenue.
Revenue from consumers, Dell’s smallest customer segment in the quarter, increased 4 percent to $3 billion.
In an interview, Dell Chief Financial Officer Brian Gladden said the company expects to see similar “muted” growth through the holiday shopping quarter.
Desktop and laptop computers made up about 56 percent of Dell’s revenue in the quarter. PCs are less profitable than Dell’s technology consulting services and other smaller slices of Dell’s business, but the company still managed to improve gross margin — a measure of profitability. Dell said lower component costs helped margins in the quarter, as did “pricing discipline” — not cutting prices too deeply to attract buyers — and improvements in the supply chain. The company said it also passed on some deals that could have hurt margins.
For the current fourth quarter, Dell indicated that gross margin would not be as strong. During a conference call with analysts, Gladden said less-profitable consumer PCs would make up more of the computers sold in the quarter. He also said…