SAN FRANCISCO, US - DELL posted a higher-than-expected quarterly profit, driven by strong demand from consumers and foreign markets and lower operating costs, and its shares jumped 8 per cent.

The world's second-largest personal computer maker pointed to the strong results on Thursday as evidence that its year-long turnaround was yielding results, led by founder Michael Dell since his return to the chief executive post in January 2007.

Dell's unit shipment growth of 22 per cent was the strongest in two years, though it also said corporate customers in the United States were keeping a tight grip on spending.

Analysts had expected a net profit of 33 cents per share on revenue of US$15.7 billion in its fiscal first quarter, according to averages of Wall Street expectations on Reuters Estimates.

'The upside, I think, was mainly from their share repurchases and slightly higher revenue,' said Ms Shannon Cross, an analyst with Cross Research. 'The gross margin is in line.'

'Dell's cost cutting is starting to benefit margins,' Ms Cross said. 'Now the company needs to show that they can maintain and gain market share beyond just benefiting from channel fill of their retail partners.' A multi-billion-dollar share buyback programme has reduced the overall share count by 10 per cent over the past year.

Dell, based in Round Rock, Texas, cut 3,700 jobs in the quarter, bringing total reductions to about 7,000 over the past year and getting it close to its target of eliminating about 8,900 positions, Chief Financial Officer Don Carty said.

Mr Carty also told reporters on a conference call that Dell's United States corporate customers were still buying cautiously.

'People are holding back from spending,' Mr Carty said. 'While we see hesitancy around workstation investments ... the appetite for servers and storage continues to be very considerable.'

Dell, which rose to prominence by pioneering direct sales of personal computers, in recent quarters has made a big push to sell through stores. It said consumer PC units shipped in the quarter grew at more than two times the industry rate, and Mr Carty expected the company to keep outpacing the industry.

'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,' said Ms Kim Caughey, senior analyst with Fort Pitt Capital Group.

'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.' Dell said sales were also driven by a 43 per cent surge in unit sales of laptop computers.

'We had unit share gains worldwide in virtually every product category and in every major region,' Mr Carty said. 'The results of this quarter are evidence that that strategy to reignite growth was the right one.'

Mr Carty said prices of computer memory, which have fallen sharply over the past year amid breakneck expansion by memory makers, were close to hitting bottom.

'Memory, for last couple quarters, sold to very close to the variable cost of production, so you know those prices don't get a whole lot lower. We certainly will not see the steep declines of a year ago,' he said. -- REUTERS