NEW YORK (CNN/Money) - Dell Computer posted fiscal first-quarter earnings per share that were even with the same period a year ago but a penny better than Wall Street's expectations.

The personal computer manufacturer posted earnings of 17 cents a share, the same as a year ago. Analysts were expecting earnings of 16 cents a share, according to earnings tracking firm First Call. Net income slipped 1 percent, to $457 million.

The company reported sales of $8.1 billion, up from $8.0 billion a year ago, and ahead of expectations of $7.9 billion.

In addition, Dell (DELL: Research, Estimates) raised guidance for its fiscal second quarter, saying that it could earn 18 cents a share on $8.2 billion in revenue. Analysts had been expecting earnings of 17 cents a share and revenue of $8.0 billion.

Dell, like most other technology companies, is still being affected by the drop-off in corporate technology spending, and is still waiting for the rebound. "We're seeing a little bit of a glimmer of hope but I don't think we're quite at a point where we're suggesting a turnaround," said Kevin Rollins, Dell's president and COO, on the conference call to discuss quarterly results.

Rollins added that the reason Dell raised its guidance for the second quarter was due to gains in market share (particularly in servers) and lowered costs, not due to a significant uptick in corporate demand. "We're not announcing that the market is swinging up," he says.

Nevertheless, the company is almost a beacon of calm when compared to its competitors. Dell was the market share leader in the PC market until Hewlett-Packard completed its merger with Compaq earlier this month. Hewlett-Packard (HPQ: Research, Estimates) finally won the battle to merge with Compaq but now it faces a horde of sticky integration issues.

Gateway (GTW: Research, Estimates), the number three personal computer, is expected to continue to lose money this year and next since it is keeping prices low in an attempt to gain market share. And on the server side, IBM (IBM: Research, Estimates) has a new CEO while several high-profile managers have left Sun Microsystems (SUNW: Research, Estimates).

With the new guidance for the fiscal second quarter, Dell's earnings are expected to be 12.5 percent higher than the same period last year and revenue is expected to increase 8 percent.

"Hopefully, Dell will pick up market share due to all the distractions its competitors are facing." says Ted Parrish, co-manager of the Henssler Equity Fund. As of April 30, Dell was the 21st largest holding in the fund, accounting for 2.2 percent of assets.

Dell stock has soared the past few days on renewed hopes of a rebound in the next few months. "The overall spending environment is still difficult but I expect personal computer upgrade cycles to start in the second half of the year," says Alan Lowenstein, co-manager of the John Hancock Technology Fund. As of April 30, Dell was the second largest holding in his fund, accounting for 3.9 percent of assets.

As a result, Dell's shares are up nearly 25 percent since May 7, closing at $27.85 on Thursday.

At that price, Dell's stock has a P/E of 37, based on earnings estimates for this fiscal year (which ends in January). Earnings are expected to grow 15 percent.

Parrish concedes that the stock is not "dirt cheap" but thinks it deserves a premium valuation because of its dominant position. Lowenstein says investors should consider buying more of the stock in the low $20s. Christopher Bonavico, manager of the Transamerica Premier Aggressive Growth Fund and Transamerica Premier Small Company Fund, says he sold his position in Dell about eight months ago and would not consider buying it again unless shares hit $20.

Bonavico does not own shares of IBM, Hewlett-Packard or other Dell competitors, and thinks Dell has gotten to the point where it is too big to be considered much of a growth stock anymore unless it can successfully find new markets. More than half of Dell's revenue came from the sale of desktop computers in the first quarter and another 27 percent came from the sale of notebook computers.

"Dell needs to execute in new areas, like storage, for additional growth. The company has the law of large numbers to go up against," Bonavico said. "The company has had fantastic gains but when companies get to a certain size it's time to move on."