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Q3: Not a good one for Dell

20 November, 08:01
Dell profit falls 54%, shares down

SAN FRANCISCO: Dell Inc. said Thursday that its net income dropped 54
percent in the latest quarter and amid signs the company isn't fully
benefiting from the computer industry's fledgling recovery.

Dell's numbers missed Wall Street's forecasts, and the shares fell
almost 6 percent in extended trading.

In the last quarter Dell lost its ranking as the world's No. 2
personal computer maker, a slot now held by Taiwan's Acer Inc.

Dell rivals such as Acer and Hewlett-Packard Co. have stolen market
share in part by exploiting their bigger presence in retail stores.

That has been a big weapon because consumer interest in little laptops
called "netbooks" has helped the PC industry start to pull out of its
worst slump in years.

Instead, Dell gets 80 percent of its business from corporations,
government agencies and other large institutions, which have remained
hesitant to spend money on new technology.

Dell said Thursday that it is seeing improvement in some areas, but
repeated its earlier prediction that a meaningful rebound in
technology spending by businesses won't come until next year.

The company has said it willing to lose some market share rather than
lower prices too much.

That is a key part of Dell's strategy to improve its profitability -
an effort that has included a huge restructuring.

Dell's work force fell by 9,300 last year to 78,900 at the end of
January, the last time Dell gave employment figures.

The company also has changed the way its makes and sells computers,
leaning more on contract manufacturers and retailers instead of doing
everything in house.

The changes weren't enough to lift Dell's profit in its latest
quarter, which ended Oct. 30. Dell's net income fell to $337 million,
or 17 cents per share.

That compares with $727 million, or 37 cents a share, in the same
period a year ago.

Revenue fell 15 percent to $12.9 billion. Analysts polled by Thomson
Reuters expected Dell to earn 28 cents per share on $13.2 billion in
revenue in the latest quarter.

Dell, which is based in Round Rock, Texas, said it expects revenue in
the current period to be better than in the prior quarter, but it
attributes that to the seasonal benefit of consumers buying PCs around
the holidays.

Dell shares fell 92 cents, nearly 6 percent, to $14.95 in extended
trading after the earnings report. - AP

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