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IT spending boosts Dell profits and revenues

Dell has reported a better than expected net profit of $441m (£306) for the first quarter of its 2011 fiscal year, 52% up on the same period a year ago.

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Dell has reported a better than expected net profit of $441m (£306m) for the first quarter of its 2011 fiscal year, 52% up on the same period a year ago.

Increased IT spending as businesses emerge from the global financial crisis also helped to increase revenue for the quarter by 21% compared with the year before to $14.9bn (£10.3bn).

Dell said its first-quarter results "reflect the powerful combination of Dell and Perot Systems and sound company execution in an overall improving business environment".

Dell bought computer services firm Perot Systems for $3.9bn (£2.7bn) in 2009.

"This quarter was highlighted by good execution in an improving economic environment," said Brian Gladden, chief financial officer at Dell.

Gladden said he was happy about the growth of Dell's commercial business, and that the computer maker will continue to make investments in enterprise products.

Dell said there were signs of the early stages of a corporate IT refresh. "Dell is optimistic that the trend will continue throughout the year," the company said.

The company added, however, that it expects some components to remain in tight supply for the next couple of quarters.

Despite the improved first quarter revenue and profit, Dell shares fell as much as 5% in after-hours trading, according to the Financial Times.

Analysts ascribed the fall to Dell's report of a thinner profit margin and warnings of a coming seasonal slowdown in purchases by large businesses.

Dell's gross margins fell to 17.6% of revenue from 18.1% a year earlier. The operating margin of 5.5% was up from the previous year, but not much improved from the fourth quarter's 5.4%.

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