Dell Soars on Earnings Blowout

Dell (NASDAQ: DELL) shares soared 10% in after-hours trading Thursday after the company reversed its recent slide with much better than expected quarterly results.

Dell shares had gained 17% this month ahead of the report, and the results showed that investors’ confidence was well placed. After closing the day at $21.81 a share, Dell shares touched $24 in late trading.

Sales rose 9% to $16.08 billion, $400 million better than analysts expected, and earnings per share of 38 cents were four cents ahead of estimates. Notebook sales jumped 43%, storage was up 15% following the acquisition of EqualLogic, and services revenues grew 13%.

Emerging markets sales grew nearly 50%, even as Americas commercial unit growth was up just 3%, and international sales exceeded U.S. revenues for the first time. The company said U.S. corporations continue to be cautious, but said the spending environment isn’t getting worse.

The company cut 3,700 jobs in the first quarter, for a 7,000 total headcount reduction in the last year.

Still, given the much better than expected sales growth, cost-cutting and share buybacks, analysts wondered on the call why earnings weren’t up even more. One possible explanation was Dell’s return to the retail market, which offers lower margins than the company’s direct sales model, and Dell has also made a push into the low-end server market in recent months.

Stocks rose ahead of Dell’s results, but finished well off their highs despite a sharp drop in oil prices.

Google (NASDAQ: GOOG) gained 2.6% after ComScore said paid click growth at the company was strong last month.

Infineon (NYSE: IFX) fell 12% on a warning.

The Nasdaq rose 21 to 2508, the S&P added 7 to 1398, and the Dow rose 52 to 12,646. Volume declined to 3.85 billion shares on the NYSE, and rose to 1.96 billion on the Nasdaq. Advancers led by a 20-12 margin on the NYSE, and 17-11 on the Nasdaq. Upside volume was 61% on the NYSE, and 68% on the Nasdaq. New highs-new lows were 65-72 on the NYSE, and 92-87 on the Nasdaq.