Dell's Better-than-Expected Numbers Raise Recovery Hopes

Paul Lilly

It's been mostly gloom and doom concerning the PC market, but analysts are hopeful of a recovery following Dell's promising second-quarter results .

The OEM reported Thursday that profit fell 23 percent and sales tumbled 22 percent in the May-July period, which doesn't sound like much to get excited over. But the results beat out Wall Street's forecasts, enough so that shares shot up 6 percent following the news.

According to company CEO Michael Dell, the better-than-expected revenue will continue through the second half the year so long as current demand trends continue. However, "aggressive" pricing and rising costs for components like memory and LCD screens have tempered the company's enthusiasm.

Some analysts also remain tempered by the overall picture.

"It's hard to say something positive when you have such a significant revenue decline -- it was not a great quarter," said Charles Smulders, a vice president with market research firm Gartner Inc. "HP had a tough time too, but clearly they have a stronger focus on consumer PCs, so that plays in their favor, since much of the demand is coming from the consumer market."

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