Icahn and Dell Both Gain From Dell Earnings

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This story has been updated with analyst comments.

NEW YORK (TheStreet) -- Dell shares dipped incrementally to $13.40 in afterhours trading after the PC-maker missed on the bottom line but beat Wall Street's first-quarter revenue forecast. During the period, the company's Enterprise Solutions group booked a solid increase in revenue, while hardware sales were dismal, giving both sides of the Dell battle an edge.

"You can see Dell gradually transition from a PC-maker, which has very little differentiation, into a solutions provider, if they can continue to ramp up operating margin," said Carr Lanphier, an analyst at Morningstar in Chicago. "The lion's share of the value is in the Enterprise Solutions group."

The Enterprise Solutions group's successful first quarter threw weight behind activist investor Carl Icahn's bid to overtake Silver Lake Partners and founder Michael Dell's $13.65 a share offer to take the company private. The numbers highlighted his argument that Dell's bid sharply undervalued the company's potential to become a serious enterprise computing rival to IBM and Hewlett-Packard .

On the other hand, the dismal performance in hardware sales during the quarter gave credence to Dell's argument that a turnaround cannot occur under the harsh light of the public eye, where calls for spinoffs have grown louder.

The impact of Dell's first quarter results on each side's argument can be described as "mixed", said Lanphier.

Dell reported first-quarter revenue of $14.1 billion, a 2% decrease from the prior year, but a beat on consensus expectations of $13.5 billion in revenue, according to Thomson Reuters.

Adjusted earnings tumbled 51% to 21 cents a share, falling short of the average analyst estimate of 35 cents a share.

During the quarter, the company's End User Computing revenue suffered a 9% decrease to $8.9 billion as the segment's operating income for the quarter declined 65% to $224 million.

On a more positive note, Dell's Enterprise Solutions revenue booked a 10% increase to $3.1 billion. Operating income in the segment increased 71% to $136 million.

The company's Services revenue grew 2% to $2.1 billion.

Given the company's Feb. 5 announcement of a merger agreement to take Dell private, the firm is not providing an outlook for its fiscal 2014 second quarter.

Written by Andrea Tse in New York

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