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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