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Dell Reports Tepid Profit Growth

After-hour trading pushes Dell shares, as investors believe tepid revenue growth in the third quarter may be a sign of a turnaround. The company`s third-quarter net income grew 11.7% from $606 million to $677 million, which represents 30 cents a share. Analyst expectations have only been 24 cents a share. The company`s revenue also increased reaching $14.4 billion, representing a 3.4% increase. Dell`s shares closed at $24.82 at regular trading and continued to rise during after-hour trading ending up costing $27.05 a share.

The computer manufacturer, which is based in Round Rock, Texas, warned its investors that the report is subject to change due to questions raised by the Securities and Exchange Commission and the United States attorney for the Southern District of New York, who are both investigating the company`s accounting.

Dell seems to be having a problem with the North American market. Nearly two-thirds of Dell`s business is in the North American market, were dell has been loosing its market share in the notebook PC segment. While Dell`s sales were up 6%, the notebook computer market grew 19% in the third-quarter. Toshiba and Hewlett-Packard each sold 23% more computers then in the previous quarter. The US desktop computer market shrunk by 16% and all major computer manufacturers sold less desktop computers in the third-quarter, all but Apple. Dell`s sales in this sector have diminished 15%. Dell has its eyes set on increased profitability, its executives say they will not change their direct-sales model, but they are trying to find new ways to improve sales.