Dell sees profits up 46 per cent

Dell chairman Michael Dell is claiming 'strong progress against our goals'

Dell has reported a strong second quarter, with profits up 46 per cent at $733m.

Strongest growth was in the enterprise computing sector which has benefited from lower computer component prices, but Dell expects these costs to rise in the third quarter.

Chairman and founder Michael Dell said: "While our results demonstrate that we have made progress against our goals, we are still in the early stages of transforming our company's structure, costs and operations."

Dell had to write off $102m in expenses related to payments for expired in-the-money stock options, and an additional $59m in costs associated with the Audit Committee's investigation into accounting and financial reporting matters, which found that some staff had misled auditors and misstated sales.

"These are preliminary results and need to be viewed with caution given that Dell intends to restate four years' worth of previous financial statements in the light of an internal investigation prompted by an ongoing US Securities and Exchange Commission investigation," said Ian Brown, senior analyst at Ovum.

"In the light of that caution, it seems that Dell is making steady progress in its attempt to get back to its winning ways of the first half of the decade, when it was taking market share from HP and IBM left, right and centre.

"It looks to us as if server sales have been the primary driver of growth this quarter."

Brown added that Dell is expected to make a series of purchases later this year to augment the services side of its business.

The analyst also expects the company to invest in new staff, specifically solutions architects, technical consultants and project managers.