Computer giant Dell has turned in higher than expected sales, beating its own forecasts and helping to shore up a tentative stock market recovery.

We are seeing some recovery in some parts of the market

Dell chief executive Michael Dell

The company said on Thursday that sales for the three months to late June came in at $8.5bn (£5.1bn), up 11% compared with the same period last year, and ahead of its own raised forecast of $8.3bn.

Profits after tax also rose, climbing to $501m from a loss of $101m one year earlier.

Dell issued an upbeat forecast for the months ahead, saying it expects sales to rise again to about $8.9bn during the July to September period.

"It is certainly a bullish outlook," said Marty Shagrin, an analyst at Victory Capital.

The news cheered investors, who marked Dell shares 28 cents higher to $27.42 in after-hours trade in New York.

Outperformance

Earlier, US stock markets ended the day in positive territory after a late rally lifted shares out of the red, reinforcing hopes that the worst of the recent equity market slump may be over.

Dell's performance during the latest three-month period extends its lead over rivals such Apple, Gateway and Sun Microsystems, which have turned in lacklustre results in recent months.

Analysts partly attribute Dell's resilience to its practice of keeping just a few days' worth of unused components in stock at any one time.

This enables it to cash in on falling component prices with very little delay.

Competitive battle

However, Dell faces a fresh competitive threat from the recent merger between Compaq and Hewlett Packard, a tie-up which displaced it as the world's biggest computer maker.

Dell said on Thursday it planned to start producing printers and handheld computers for the first time, a move which would see it challenging Compaq/HP in one of its main markets.

It did not say when these products would be launched.

While Dell did not forecast an imminent recovery in the market for technology products, it said that sales of large computers used by businesses rose by 20% on the year during the last three months.

"We are seeing some recovery in some parts of the market," said chief executive and founder Michael Dell.