The company said that it now expected revenue over the period to reach $9.1bn (£5.8bn), up from its previous estimate of $8.9bn. Earnings per share are expected to be 21 cents.

Dell's chairman and chief executive Michael Dell said the company had seen growth in shipments of servers and storage systems.

Mr Dell also said the company would make more than $1bn in cost savings this year.

In after-hours trade, Dell shares rose to $25.73 from its close of $24.64.

The tech sector had been cheered late on Monday when Sun Microsystems revised its fourth quarter earnings higher after it said costs had been lower than expected.

Sun's shares rose 17 cents to $2.76 during trade on Tuesday.

Strong growth

Dell has pursued an aggressive price strategy to win market share from rivals.

And the plan appears to be working. Sales during the second quarter were up 11% compared with the same period last year, while profits after tax rose to $501m from a loss of $101m in 2001.

The company has also said it is planning to start making printers and handheld computers for the first time, in a move which could see challenge its main rival Hewlett-Packard.

Dell held the title of the world's largest personal computer maker until the takeover of Compaq Computer by Hewlett-Packard earlier this year.