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Dell Does Just Swell

ROUND ROCK, Texas ( TheStreet) -- Dell (DELL) shares jump on stronger than expected sales, profits and margins.

Defying the ongoing slump in PC sales and the rising popularity of netbooks and Apple Mac computers, Dell posted a profit of 24 cents a share, according to a financial document on Dell Web site that appeared before the market closed.

The bottom-line performance was better than the 15-cent earnings in the prior quarter and exceeded analysts' estimates by a penny.

Sales for the fiscal second quarter ended last month were $12.7 billion, up from the $12.3 billion in the prior quarter but down from the $16.4 billion level in the year-ago period. Analysts were looking for sales of $12.6 billion, according to Yahoo! Finance.

Margins showed a surprising improvement in the quarter as solid sales and cost cuts seem to be working. Dell's gross margin was 18.7%, which is wider than the 17.6% margin in the prior quarter.

While laptop sales remained even with the prior quarter, Dell saw a 5% sequential increase in desktop PC sales and a 9% improvement in server revenue.

Dell saw continued weakness in its sales to businesses large and small, but the company did get a nice 20% sequential bump up in sales to schools and governments.

Dell results were released just prior to the market's close Thursday. In the few minutes of regular trading Dell's shares jumped 7% to $15.65.

Written by Scott Moritz in New York.

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