Dell, the industry's basket case, survived the July quarter with shipments, revenue, operating income, gross margin and earnings all higher sequentially while operating expenses are still on the decline, down 14% in the period.

The company was so excited and relieved it (probably accidentally) put the numbers out before the market closed.

It earned $472 million, or 24 cents a share, down 23% year-over-year, on revenues down 22% to $12.76 billion. Horrific as it might be it's better-than-expected. And it mentioned a "stabilizing spend."

The results aren't that much different from HP's, which has EDS for ballast.

Dell was expected to do 23 cents on $12.6 billion in revenue.

It said shipments were up 10% sequentially, revenue up 3% and revenue from servers and storage combined up 7%.

Relief seemed to center on the month of July.

Cash flow from operations was $1.1 billion, meaning Dell ended the quarter with $12.7 billion in the bank.

Its gross margin was a better-than-expected 18.7% thanks to what it called an improved cost of goods sold, disciplined pricing, a sequential increase in sales from enterprise products and a $69 million buyout of a revenue-sharing agreement.

Otherwise it saw pressure in component costs, competitive pricing and a "revenue mix in client systems."

Large enterprise revenue, Dell's main business, totaled $3.3 billion, down 3% sequentially or 32% year-over-year, a fact it blames on the lower IT spend worldwide. Operating income in the segment amounted to $172 million.

So-called public revenue came to $3.8 billion, up 20% sequentially but down 16% since last year. The company said growth in its larger government accounts and seasonal education business partially offset weaker demand in other parts of the business, namely state and local government and healthcare. Operating income was $383 million, up 16%.

SME revenue was $2.8 billion, down 5% sequentially or 29% year-over-year. Operating income was $246 million, up 40 basis points from last year as gross margin improved.

Consumer was up a 17% in unit volume and 2% in revenue at $2.9 billion, down 9% year-over-year. Operating income was $89 million.

Revenue from the company's EqualLogic storage acquisition jumped 42% year-over-year. Server product shipments were up 12% and revenue was up 9% sequentially.

Revenue from the BRIC countries - Brazil, Russia, India and China - grew 16 % sequentially. They now represent 10% of total revenue.

The company offered little in the way of immediate guidance. It figures that if current demand trends continue, revenue in the second half of the year will be stronger than the first half.

CFO Brian Gladden said, "The best path for Dell remains one focused on profitable growth, lower costs and smart use of working capital," a catechism-style remark.

Getting a bit more specific it said consumer and US federal government businesses could increase but the quarter is also usually slow for large commercial customers in the US and Europe.

Given the aging eight-year-old PC population out there, it's counting on a big refresh cycle in commercial accounts in 2010, with IT spending improving first in the US.

Michael Dell claimed that between Intel's Nehalem chip, Windows 7 and Office 2010, "You'll love your PC again."

Virtualization is expected to continue to tickle the server sector. Dell doesn't see it affecting clients much.

Netbooks, virtually unseen in the commercial sector, are supposed to be having little impact on Dell's sales.

Desktop PC revenue fell 30% in the quarter while notebooks and other mobile gadgets were down 21%.

Shipments of consumer PCs were up 17% year-over-year on revenue down 9% to $2.9 billion.

Dell claims to be gaining share in servers and storage. Server sales were reportedly up 9%.

Large deployments have been stalled by the downturn. Back-to-school sales are supposedly doing nicely.

Dell said it's feeling pressure in component costs and aggressive pricing near-term, which could eat into margins.