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Dell slows down in third quarter

PC sales tank

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Dell waddled through a sticky third quarter in which the company met lowered revenue totals and coughed up hundreds of millions for faulty products and layoffs.

In its worst quarter in recent memory, Dell posted revenue of $13.9bn - an 11 per cent year-over-year rise. The hardware maker once suggested that revenue for the period could hit has high as $14.5bn but pared back such guidance last month. At the same time, Dell warned that it would take a $442m charge - $300m for OptiPlex desktop fixes and $100m for laying off close to 1,000 workers - and then delivered on those warnings today.

Dell's net income fell to $606m in third quarter from $846m last year. That 28 per cent drop is a rare miss for a company that prides itself on delivering consistent double-digit growth.

CEO Kevin Rollins had once pledged to push Dell's revenue to $80bn within three to four years, but refused to commit to such a definitive timeline, during a conference call today with analysts. A number of pundits speculated this week that the Dell will struggle reach strong growth in the near future due to pricing pressure and a heavy dependency on PC sales.

Dell expects fourth quarter revenue to come in between $14.6bn and $15.0bn.

The majority of revenue for Dell came from PCs, although sales of computers fell from $5.2bn last year to $5.1bn. Laptop sales improved to $3.6bn from $3.1bn, server sales increased to $1.4bn from $1.2bn, storage sales increased to $500m from $300m, services increased to $1.2bn from $1bn and software and peripheral sales jumped to $2.1bn from $1.7bn.

Dell shares moved slightly lower in the after-hours markets after it reported the results. ®

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