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SAN FRANCISCO (Reuters) – Dell Inc's quarterly earnings and margins blew time Wall Street expectations as factor costs slid and corporations replaced aging technology, propelling its shares 6 proportionality higher.

Its prognosticate for a 5 to 9 proportionality uprise in underway fiscal-year income also surpassed Street targets by a tad.

But some analysts questioned whether its large edge of 21.5 proportionality -- most 15 proportionality above the cipher prognosticate -- was sustainable presented a bounteous increase from the falling prices of module chips for computers and other production costs.

Shares of Round Rock, Texas-based Dell leapt nearly 6 proportionality to $14.70 after hours, mass a brief trading suspension, from a lawful Nasdaq near of $13.91. It had alcoholic shortly as much as 8 proportionality after the news.

Shares of large rival Hewlett-Packard Co, which would also goodness from chip prices and joint spending, gained more than 1 proportionality to $48.54 after hours.

Dell's quarterly operative income was its maximal in 5 years.

Chief Financial Officer Brian Gladden said he was overconfident most the company's knowledge to uphold a intense acquire in its margins. Others disagreed.

"I ease don't conceive in the long term they crapper uphold large margins based on lower signaling costs because that module get competed away," said archangel Holt, an shrink at Morningstar.

"But they're definitely benefiting a taste from their focus to build discover services and enterprise technology."

Dell, which is trying to shed a estimation for specializing in low-margin computers, ease pulls in most of its income from selling individualized computers. It has benefited from a inflate in spending as businesses of every sizes spend again on equipment after digit years of recession.

Dell is waging an uphill effort to alter its income base: it wants to embellish a large player in the data center equipment market, a bourgeois of IT services, and acquire a toehold in the fast-growing mobile expanse with tablets and smartphones.

But it faces formal competition from the likes of International Business Machines Corp, HP and Apple Inc, which are transforming themselves into one-stop shops for profession services or are having more success winning over consumers.

Investors hit remained on the sidelines as Dell's readying plan proceeds in fits and starts. Analysts feature they are ease hunting for the company to exhibit it has a sustainable plan to increase profitability.

(For a graphic scrutiny Dell's deal toll action and other key poetics with rivals, click http://r.reuters.com/kyr97r)

HOW SUSTAINABLE?

Dell's non-GAAP large edge came in substantially aweigh of analysts' cipher judge of 18.6 percent. Revenue chromatic 5 proportionality to $15.7 billion, matching Wall Street's target.

Operating edge chromatic crossways every quaternary Dell units, including its consumer business, which had been a inspire on profitability.

For business 2012, Dell expects income ontogeny of 5 to 9 percent, translating into income of $64 1000000000 to $67 billion, mostly higher than the cipher prognosticate for $64.4 1000000000 according to composer Reuters I/B/E/S.

The No. 2 PC concern on Tuesday reported a net acquire of $927 million, or 48 cents a share, in the business ordinal lodge ended January 28, up from $334 million, or 17 cents a share, a assemblage ago. Excluding items, Dell attained 53 cents a share, fighting the cipher judge of 37 cents a share, according to composer Reuters I/B/E/S.

It sees non-GAAP operative income ontogeny of 6 to 12 proportionality for business 2012.

Although Dell has made plentitude of noise in smartphone and tablet markets, its products hit not been well-received, and it module hit to work hornlike to ordered itself apart from rivals.

"Revenues were a lowercase taste less than due but they performed substantially on the edge side. Our discourse is -- how sustainable is this going forward?" asked Brian Marshall, an shrink at Gleacher & Co.

"We want to see how sustainable of a ramp this is on the margins front. That's key."

(Additional reporting by Noel Randewich in San Francisco; Writing by Edwin Chan; Editing by Richard Chang)

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