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Dell beats earnings estimates on higher desktop sales; stocks will rise by 9%

(Reuters) – Dell Technologies, Inc. (“DELL technical support.(N) beat Wall Street profit estimates on Thursday, helped by an increase in demand for desktop and laptop computers, as well as a focus on more profitable contracts within the server unit, and in China, sending the shares of the company are up 9 percent in extended trading.

FILE PHOTO: The logo of the Dell Technologies, Inc. it is displayed on a screen on the floor of the New York Stock Exchange (NYSE) in New York, New York, USA, on 10 January 2019 at the latest. REUTERS/Brendan McDermid

The PC maker is seeing decreased demand in the industrial sector in China is in the midst of an escalating Sino-US trade war, but the focus is on selected major deals in the Asian country helped to earn a “high-margin dollars,” in a slow market.

This has helped the company forecast full-year adjusted earnings per share in the range of $6.95 to $7.40, above analysts ‘ estimate of $6.42, in accordance with the IBES data, on Refinitiv.

The company said it was working to increase the prices of its products, including desktops and workstations, designed to offset the impact of the additional 5% for rates effective Sept. 1 on the Chinese goods.

“Our costs are going up, and we’ll have to move the price,” the company’s Chief Operating Officer Jeffrey Clarke said in a conference call with analysts.

Sales were down 7% from the servers of the company of up to $ 8.6 billion, but its operating profit rose 4% to $1.05 billion.

Dell said the server and the rest of China, grew by 1% in the second quarter, the company expects to gain market share in the current quarter in North America, Europe, the Middle East, and Africa (EMEA) region.

The company reported a 6% jump in revenue in its client solutions business, which makes desktop pcs, laptops and tablets, and peripheral devices. Operating income in the unit more than doubled to a total of $982 million.

Dell is taking advantage of a rise in the sales of workstations for businesses and higher-end pc’s for gaming.

The company returned to the stock market after an absence of six years, in December of last year, after it bought a stake in software maker VMware (VMW.(N) in place of the current ownership of a controlling interest.

Dell posted net income of $4.51 billion in the second quarter, which ended Aug. 2, as compared to a net loss of $461 million for the prior year.

With the exception of the items, the company earned $2.15 per share, which is higher than the average analyst estimate of $ 1.47 per share.

Total revenues increased 2% to $23.37 billion, beating the average analyst estimate of $23.24 billion.

Reporting by Neha Malara in Bengaluru; Editing by Maju Samuel and Mark Kuber

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