GreenBkk Tech | Instant view:Dell margins and profit beat Street view

Instant view:Dell margins and profit beat Street view

Credit: Reuters (www.reuters.com)

(Reuters) - Dell Inc posted a much higher than forecast quarterly margin and profit amid sli-sliding component costs, but revenue came in below Wall Street's expectations as the company warned of a "muted" consumer market this quarter.

Commentary:

SHAW WU, ANALYST, KAUFMAN BROS

"The gross margin was surprisingly strong. Frankly, it's surprisingly strong and it doesn't seem like there's a write-off in the quarter, but it could be the case that a write-off they've taken in the past has finally paid off.

"The cash flow was down $400 million sequentially, meaning last quarter they generated $1.3 billion in cash flow from operations and this quarter they only reported $913 million. So even though the cash flow was down $400 million, the earnings was better. It's just a little odd."

ANANDA BARUAH, ANALYST, BREAN MURRAY

"The revenue is a little light, the gross margins were a blowout. Q4 revenue to me is a disappointing."

"I have to see what they say on the call. My sense, if I had to guess, they are walking away from some less-profitable businesses. Component pricing is a tailwind and the biggest contributor to the gross margins. I wouldn't be surprised if they are walking away from less profitable businesses. Public margins were fantastic."

ASHOK KUMAR, ANALYST, RODMAN AND CRENSHAW

"The positive here is the profitability is coming ahead of expectations, but it's unclear whether that's sustainable.

AARON RAKERS, ANALYST, STIFEL, NICOLAUS & CO

"Gross margins is obviously the key headline here at 20 percent, obviously well above the Street and our expectation of 17.5 (percent).

"Leverage in the model is going to be key as people gage the sustainability of what was a very strong gross margin number."

COREY BARRETT, ANALYST, PACIFIC CREST SECURITIES

"It looks like their corporate sales were really strong.

"Notebook sales were weak, but you could have guessed that from the NPD numbers we've seen over the last few months.

Dell also had a "lower tax rate than expected."

BRIAN MARSHALL, ANALYST, GLEACHER & CO

"The revenues look a little bit light but the earnings look pretty strong. The consumer business remains muted while the commercial business and enterprise business remains stable. It's kind of as-expected.

"I don't think there's any major surprise there."

(Reporting by Jennifer Saba in New York and Alex Dobuzinskis in Los Angeles)