Dell Reports Revenue That Tops Estimates on PC Strength

(Bloomberg) -- Dell Technologies Inc. reported quarterly revenue that exceeded analysts’ estimates on strong spending from consumers and companies on laptops and desktop computers.

First-quarter sales rose 12% to $24.5 billion, the Round Rock, Texas-based company said Thursday in a statement. That compares with analysts’ average estimate of $23.3 billion, according to data compiled by Bloomberg. Profit, excluding some items, was $2.13 a share. Analysts projected $1.60.

Chief Executive Officer Michael Dell is trying to reduce the reliance of his eponymous company on one-time hardware sales and transform it into a seller of subscription-based computer services. It still gets about half of its revenue from PC purchases by companies and consumers.

Dell shares closed at $99.70 in New York. The stock has increased 36% this year.

Revenue from consumer PCs rose 42% to $3.5 billion in the period that ended April 30, the company said. That compares with a 19% expansion in the prior period. PC sales to business and government agencies were up 14% to $9.8 billion.

Server and networking sales rose 9% to $4.1 billion from a year earlier. Storage hardware revenue was $3.8 billion.

Sales from VMware Inc., which is majority-owned by Dell, were $3 billion, up 9%. In April Dell said it will spin off its stake in VMware, creating two publicly traded companies and raising cash to pay down debt.

The spinoff will unwind, at least in part, a consolidation created five years ago in Dell’s $67 billion acquisition of VMware’s parent, EMC Corp. The spending spree helped Dell branch out from its origins as a personal computer maker, but left the company saddled with debt.

VMware will distribute a special cash dividend of $11.5 billion to $12 billion to shareholders at the close of the deal, which is expected by the fourth quarter. Dell, which owns 81% of VMware, will receive a payout of as much as $9.7 billion.

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