Dell is trying to boost sales through more outlets

Profits rose 27% to $766m (£371m) or 34 cents a share in the three months to 2 November, up from $601m (27 cents) a share in the same period in 2006.

Analysts said the numbers showed Dell was recovering but that it missed the average 35 cent a share forecast.

Faced with tough rivalry from Hewlett Packard, Dell has been trying to boost sales by selling at retail outlets.

Hewlett-Packard overtook Dell as the number one PC maker during 2006.

"We embarked this year on a long-term strategy to re-ignite growth," said Michael Dell, the firm's founder and chief executive.

He said the results showed "solid progress through investments in five key business priorities - consumer, emerging countries, notebooks, enterprise and small-medium business."

Brent Bracelin, an analyst with Pacific Crest Securities, said the earnings were roughly as expected after allowing for one-off expenses.

But he added: "The disappointment here is that you didn't see a follow-through of revenue upside to earnings upside....but the company is coming out of a two-year slump here and is still in turnaround mode."

Shares in the firm fell 7% in after hours trading. In May Dell outlined plans to sell personal computers through low-cost retailer Wal-Mart, marking a significant change for Dell, which had previously relied only on telephone, mail and internet sales.

Dell said US consumer business sales fell 6% however China, Brazil, Russia and India all saw strong growth.

According to Gartner, Dell shipped about 9.9 million computers worldwide during the quarter, while HP shipped 12.8 million.