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After Hours Action: Dell

Tuesday, 15 Feb 2011 | 5:08 PM ET

Shares of Dell surged higher in extended trade after the company blew past Wall Street forecasts with earnings that had nearly doubled from one year ago.

Investors took the results as a sign of Dell's commitment to turn itself around and boost profitability.

Also, the Street was cheered to hear that corporations were willing to spend on computers after so much chatter suggested otherwise.

Dell pulls in most of its revenue from selling personal computers and said it benefited from a surge in spending as businesses of all sizes spend again on equipment after two years of recession.

"These results tell us Dell’s core business is alive and well,” says Tim Seymour. “And they’re one of the best at it.”

By the numbers, Dell reported a net profit of $927 million, or 48 cents a share, in the fiscal fourth quarter ended Jan. 28, up from $334 million, or 17 cents a share, in the year-ago period.

Excluding items, Dell earned 53 cents a share, beating the average analyst estimate of 37 cents a share, according to Thomson Reuters .

For fiscal 2012, Dell expects revenue growth of 5 to 9 percent, and non-GAAP operating income growth of 6 to 12 percent.

The Tech & Inflation Trades
CNBC's Melissa Lee and the Fast Money traders discuss the Dell earnings and why it might be better to look elsewhere in the tech sector. Also, a look at how to trade rising inflation in light of the news coming out of China. And oil hits an 11-week low. Will rising rates continue to snuff out demand?

What’s the trade?

I’m hard pressed to suggest that investors should go racing into Dell at current levels, says Guy Adami. $15 has been huge resistance over the past several months. It needs to stay above $14.75 for a few days before I'd get in here.

I’m not sure they can change their product mix fast enough to adjust to the rapidly changing landscape, adds Karen Finerman. I can’t own it.

In this space, I'd look at Hewlett-Packard, says Stephen Weiss. It's a cheap stock and they have overlapping businesses.

I don't agree, says Tim Seymour. I don't think there's enough in Dell to extrapolate to Hewlett Packard.

Read More:

Dell Profit Leaps, Easily Tops Wall Street Targets




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Trader disclosure: On Feb 15, 2011, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders; Seymour owns (AAPL); Seymour owns (BAC); Seymour owns (F); Seymour owns (FXI); Seymour owns (GE); Seymour owns (GM); Seymour owns (INTC); Seymour owns (POT); Adami Owns (AGU) ; Adami Owns (C); Adami Owns (GS);; Adami Owns (INTC); Adami Owns (MSFT); Adami Owns (NUE); Adami Owns (BTU); Adami's wife works for (MRK); Finerman's Firm Is Short (IWM); Finerman's Firm Is Short (SPY); Finerman's Firm Is Short (MDY); Finerman's Firm Is Long S&P Puts; Finerman's Firm Is Long Russell 2000 Puts; Finerman's Firm And Finerman Own (AAPL); Finerman's Firm Owns (BAC) Leap, Finerman Owns (BAC); Finerman's Firm Owns (BBY); Finerman's Firm And Finerman Own (BP); Finerman Owns (C); Finerman Owns (GOOG); Finerman's Firm And Finerman Own (HPQ); Finerman's Firm Owns (IBM); Finerman's Firm Owns (JPM), (JPM) Leap; Finerman Owns (JPM); Finerman's Firm Owns (M); Finerman's Firm Owns (MCD); Finerman's Firm And Finerman Own (MSFT); Finerman's Firm Owns (WMT); Jon Najarian owns (NWL) calls; Jon Najarian owns (DELL) calls; Jon Najarian owns (CHS) calls; Jon Najarian owns (AMD), is short (AMD) calls; Jon Najarian owns (BP), is short (BP) calls; Jon Najarian owns (CME), is short (CME) calls; Jon Najarian owns (CBOE), is short (CBOE) calls; Jon Najarian owns (GS), is short (GS) calls; Jon Najarian owns (JNPR), is short (JNPR) calls; Jon Najarian owns (NYX), is short (NYX) calls; Jon Najarian owns (RIMM), is short (RIMM) calls; Jon Najarian owns (WMT), is short (WMT) calls; Jon Najarian owns (X), is short (X) calls; Weiss owns (QCOM); Weiss owns (VZ); Weiss owns (SMCI); Weiss owns (CSCO); Weiss owns (MSFT); Weiss owns (AGU); Weiss owns (IPI); Weiss owns (JPM); Weiss owns (FAS); Weiss owns (UUP); Weiss owns (MEE); Weiss owns (BTU); Weiss owns (CNX); Weiss owns (DVN); Weiss owns (COP); Weiss owns (HBAN)

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For Sal Arnuk
Arnuk has no disclosures

For Aldo Mazzaferro
Mazzaferro has no disclosures

For Scott Nations
Nations is long (SPY)

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  • Melissa Lee is the host of CNBC's “Fast Money” and “Options Action.”

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  • Finerman is president of Metropolitan Capital Advisors, Inc., a company she co-founded.

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  • Chief Market Strategist for Virtus Investment Partners & CNBC Contributor

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