Dell’s Earnings Beat Forecasts

SAN FRANCISCO — Dell has yet to find the formula to reinvigorate its consumer business, but its sales to corporations and institutions are strong despite a weak economy.

(New York Times)

SAN FRANCISCO — Dell has yet to find the formula to reinvigorate its consumer business, but its sales to corporations and institutions are strong despite a weak economy.

The company’s divergent fortunes were on display yet again Wednesday as Dell reported overall strong third-quarter results. While the part of the business that sells to businesses, governments and other institutions performed well, the company’s consumer products — computers for home use, along with mobile devices — made minuscule gains.

“They went through a period where they didn’t have the right product and they didn’t have a strong reputation for service,” said A. M. Sacconaghi Jr., an analyst with Sanford C. Bernstein & Company. “That reputation may be lingering.”

Sales of Dell’s consumer products in the third quarter rose 4 percent to $3 billion, compared with the same period in 2009. Commercial sales, in contrast, grew 24 percent to $12.4 billion.

In a sign of its consumer problems, Dell announced on Wednesday that Ronald G. Garriques, a former Motorola executive who oversees Dell’s mobile products unit, would be leaving in January. The company said the communications division, which included mobile devices, would be closed and its operations folded into other parts of the company.

Michael S. Dell, chief of Dell. The computer company said that revenue saw strong gains in every unit except consumer products.

Dell is grappling with its consumer business, particularly its relatively small footprint in mobile devices. Dell’s mobile products, including the Streak tablet, have failed to catch on with consumers.

“They are almost nonexistent,” Mr. Sacconaghi said. Dell’s consumer mobile business competes against Apple and the popular iPhone and iPad.

Nevertheless, Michael. S. Dell, Dell’s chief executive, described mobile devices as “great opportunities for us.”

Stephen J. Felice, president of Dell’s consumer products, said that the company spent the last year learning about mobile, adding that they could also be sold to businesses. Dell, he said, is now more bullish on the niche.

Dell’s consumer business is only 19 percent of Dell’s overall business. Most of its revenue comes from selling computers, servers and data storage to corporations, hospitals, schools and government agencies.

Dell said it expected revenue from consumers would be “muted” in the current quarter, but it saw “continued strength” from the corporate sector.

Dell’s third-quarter profit more than doubled to $822 million, or 42 cents a share, from $337 million, or 17 cents, in the year-ago quarter. Revenue for the quarter, which ended Oct. 29, climbed 19 percent, to $15.4 billion, from $12.9 billion a year ago.

The adjusted net income of 45 cents a share was above Wall Street analysts’ expectations of 32 cents a share. Revenue fell just short of analysts’ estimates of $15.74 billion, according to a survey by Thomson Reuters.

Shares of Dell, based in Round Rock, Texas, gained close to 4.57 percent in after-hours trading following the announcement. They had closed up 2.36 percent in regular trading at $13.66.

Revenue from large enterprises rose 27 percent, and revenue from the public sector, which includes government, hospitals and other institutions, climbed 20 percent. Revenue from small- and medium-size business was up 24 percent.

Investors have been watching for signs of a slowdown in technology spending during the quarter. Comments last week by executives at Cisco Systems about government agencies cutting back on technology spending had worried Wall Street and raised questions about whether other companies would also feel the effect.

After Cisco said last week that orders from government fell 25 percent in the quarter compared with a year ago, and 48 percent from the previous quarter, shares of Cisco fell 16 percent.