Tech Industry

Dell fuels tech stock rally

The direct PC marketer handily beats Wall Street estimates, due in part to continued strong sales on the Web.

Dell Computer (DELL) today fueled a tech rally after reporting that its first-quarter net income soared 157 percent over a year ago.

Dell's blockbuster results, which were reported after the market's close yesterday, handily beat Wall Street analysts' estimates and sent its shares up 7-1/8 over yesterday's close to 106-3/4 today.

The mail-order computer maker reported that revenues jumped 58 percent over a year ago--almost three times the market's growth rate.

Analyst Charlie Wolf of CS First Boston hiked his estimate of Dell's fiscal 1998 earnings to $4.70 a share from $4.15. He set his 1999 estimate at $6.20 a share and repeated a "buy" rating on the stock.

Dell's net income was $198 million, or $1.08 a share, for the quarter, vs. $82 million, or 42 cents a share, a year ago.

Wall Street's consensus estimate for the quarter had been 93 cents a share, according to a survey by First Call.

Sales for Dell, the nation's largest direct seller of computers, totaled $2.6 billion for the quarter, which compares with $1.6 billion in the year-ago quarter.

Orders on its Internet site continued to generate more than $1 million in sales per day, Dell said.

The Round Rock, Texas-based computer seller also declared a two-for-one stock split to be paid in a 100-percent stock dividend July 25 to shareholders of record as of July 18.

"Our first-quarter results continue to reflect the competitive strength of Dell's direct business model when combined with solid execution," said Michael Dell, the company's chairman and chief executive officer, in a statement.

Dell said U.S. sales increased 64 percent to $1.7 billion and, on a unit basis, rose more than three times the U.S. market's growth rate. Its sales in Canada rose 103 percent.