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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.