INVESTORS FINALLY GOT

some good news out of

Dell

Hewlett-Packard

late Thursday. And although this turnaround still has a ways to go, the results suggest that so far it's progressing rather well.

Not too long ago Dell was No. 1 in its business, and with good reason. It offered a lot of computing power for the price, its just-in-time manufacturing system was enviably efficient, and it had fine customer service. That was a recipe for success, especially in an industry that is highly commoditized. Computer makers, after all, really just wrap a plastic box around a bunch of other companies' components.

Then came shrinking margins and shoddy customer service, just two ways in which Dell slipped up. Perhaps most painful was the explosion in popularity of laptops at the expense of desktops. Dell's direct-sales-only model was a supremely cost-effective way to move desktops. For laptops, not so much.

People want to fondle, heft and try out the things before buying them, and with no retail presence, Dell was out of luck. It also didn't help that its designs were so boring, churning out one black, plastic slab after another. Apple doesn't sell a lot of laptops just because the operating system is so good; the industrial design is near well a work of art.

So it isn't just that Dell exceeded the Street's estimate by four cents a share. True, that's an impressive beat by any measure, but then analysts weren't expecting much from a company that has too long been a show-me story. It's the way Dell beat that is rightfully giving the market hope.

On the operational side of things, Dell's gross margins slipped and its costs rose. Not too great on the face of things, but the company made enormous progress in the painful but necessary task of shedding employees.

More significantly, Dell posted a 20% jump in international sales, allowing overseas revenue to eclipse domestic receipts for the first time in company history. That's very good news, bearing in mind all the hand-wringing going into the report over Dell's reliance on U.S. business. After all, major exposure to overseas revenue has been a key to H-P's weathering the current downturn so well.

But perhaps neatest of all was Dell's strength in laptops. Revenue expanded by more than 20% and shipments grew more than 40%. We'll take that as proof that the company's done a fine job in redesigning and reinvigorating its laptop line-up. And a sneak peak at an upcoming mini-notebook instills us with confidence that Dell finally gets it, and that consumers will follow.

The market's immediate reaction to the news (as it too often is) is likely too euphoric. Dell is, after all, still very much in the early stages of a multiyear turnaround. But, as we said recently, shares look pretty good given the company's prospects. Once the current jubilation cools off, investors might want to get a Dell for their portfolios.

Also See:

• Turnaround Efforts Are Reviving Dell's Stock

• 5 Mini-Laptops Worth Toting Around

• It's Too Early to Hit Restart on Dell Shares