The company reports net income of $25 million, or 11 cents per share for its first quarter, beating Wall Street estimates by a penny.
FirstCall predicted earnings of 10 cents a share for the quarter, which ended September 27.
Total operating revenue for the quarter was $2.96 billion, up 2 percent from the same quarter last year.
"Given the seasonal factors that traditionally affect our first quarter, I am very encouraged by our performance," said Digital chairman Robert B. Palmer in a statement. "We put more muscle and stronger focus behind our sales and marketing efforts with positive results."
The company reported very solid growth in its server offerings. Windows NT server growth was driven by Intel-based servers which grew in excess of 140 percent over the comparable quarter last year. UNIX/AphaServer revenue was nearly 30 percent higher year-over-year.
Digital?s revenues have fallen sequentially for the past four quarters, and the company reported a 10.4 percent drop at the end of fiscal 1997. Meanwhile, the quarter also marks the fourth sequential quarter where Digital has posted a profit.
The company?s shares recently hit its 52-week high of 50-1/16 last Friday, as investors bid up the shares on talk of Intel buying or cross-licensing Digital?s Alpha chip technology as a way to settle a lawsuit between the two companies. But Digital, in an effort to quell rumors, has stated it will continue to support the Alpha chip.
Digital?s stock has been climbing since early April, when it posted a 52-week low of 25. And today rose as high as 51 in morning trading, up from its close of 49 yesterday.
Growth and profits in the computer industry were expected, at least for the big players, in this quarter. One of the main growth drivers, analysts predicted, would be in the server arena.
Dawn Yoshitake contributed to this report