Dell profit tops Wall Street target

SAN FRANCISCO (Reuters) - Dell Inc (DELL.O), the world's second-largest personal computer maker, posted a higher-than-expected quarterly profit on Thursday driven by strong demand and lower operating costs, sending its shares up nearly 8 percent.

COMMENTARY:

SHAW WU, ANALYST, AMERICAN TECHNOLOGY RESEARCH

"This quarter is definitely stronger than expectations, but of course this is what it should have been last quarter when they disappointed. Nonetheless, pretty strong results.

"The (notebook) units (revenue growth) came in pretty strong at 22 percent, we had high teens. Gross margins were a little light, but looks like they contained expenses better than people thought. Other income was higher than usual, and maybe added a penny or penny-and-a-half to earnings. Unlike last quarter, strong unit growth did translate into top line and bottom line growth."

KIM CAUGHEY, SENIOR ANALYST, FORT PITT CAPITAL GROUP

"IDC and Gartner said it was kicking butt in the server area, and that really is the company's sweet spot. It's good to see Dell there instead of chasing things like TVs and consumer appliances. This bodes well for Dell.

"Michael Dell had a very slow start (to the turnaround). One quarter doesn't a trend make, but I'm willing to sit back and wait because it looks like he has gotten some traction, especially on the costs.

"One of the reasons we've stuck with Dell and continued to hold the stock was no one had come in and taken the corporate customer.

"The corporate IT (information technology) customer hasn't left Dell because it is uniquely positioned to deliver what IT departments need, which is consistency in the product."

SHANNON CROSS, ANALYST, CROSS RESEARCH:

"The upside, I think, was mainly from their share repurchases and slightly higher revenue. The gross margin is in line."

"Dell's cost cutting is starting to benefit margins. Now the company needs to show that they can maintain and gain market share beyond just benefiting from channel fill of their retail partners."

(Reporting by Duncan Martell and Anupreeta Das in San Francisco, Daisuke Wakabayashi in Seattle and Cal Mankowski in New York, editing by Peter Henderson)