Dell Inc, the world's second-largest personal computer maker, on Thursday reported higher-than-expected profit as it benefited from lower costs for disk drives, microprocessors and other components.
But the company also said it expected component cost declines to slow in the second half, crimping profits, and it delayed any stock buybacks until after it files overdue financial reports with securities regulators.
The shares rose less than 1 percent in extended trading following the earnings report after closing up 60 cents, or 2.2 percent, at $28.46 on Nasdaq.
Net income in Dell's fiscal second quarter increased to $733 million, or 32 cents per share, from a reported $502 million, or 22 cents per share, a year ago. Revenue rose to $14.77 billion from a reported $14.1 billion a year earlier.
Dell said the figures were preliminary because it is restating some prior periods following a year-long accounting audit that concluded this month. Analysts, on average, had expected earnings per share of 30 cents and revenue of $14.62 billion, according to Reuters Estimates.
Dell, which announced a 10 percent staff cut in May, said it would continue to cut jobs as part of its cost-reduction efforts.
Dell, like competitors Hewlett-Packard Co and Apple Inc, profited from lower costs for computer components amid a supply glut. HP, the top PC maker by market share, also suggested this month that component cost reductions may slow.
Dell's profit was reduced by $102 million, or 3 cents per share, due to payments to its former CEO and 400 employees for stock options that could not be exercised during the company's internal audit, which found that executives adjusted accounts to meet financial targets.
The company also recorded $59 million, or 2 cents per share, for costs related to the audit investigation.
Dell shares trade at about 21 times expected 2007 earnings per share, compared with HP's multiple of 17 and Sun Microsystems Inc's 38.
(Reporting by Philipp Gollner)