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Employee axing is relaxing bottom line

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Dell posted a strong first quarter in its fiscal 2009, but the results, which beat many Wall Street estimates, shouldn't be taken as a sign that US companies are opening their wallets again.

For the first time ever, Dell's overseas sales accounted for the majority of its revenues. The major contributors to the number two computer maker's coffers were Brazil, Russia, India and China — dishing out almost 9 per cent of Dell's total revenue.

Dell's total Q1 revenue was $16bn, up 9 per cent from the same period last year. Net income was $784m, up almost 4 per cent from fiscal Q1 2008.

Round Rock also attributed the quarter's financial success to its ongoing corporate restructuring, and yes, all the employees it's been axing lately.

The company says it has slashed 7,000 jobs in the past year. Just in Q1 it reduced the headcount by some 3,700 employees. That figure is counterbalanced by taking in an additional 2,700 employees through acquisitions, making the net reduction about 5 per cent.

Notebook revenue has also taken off for Dell. Sales advanced 22 per cent, to $4.9bn. That made mobile sales in Q1 account for almost a fifth of overall sales.

Server revenues rose 4 per cent over the previous year, earning Round Rock $1.65bn in Q1 2008. Desktop PC revenues fell 5 per cent to $4.7bn. Storage revenues grew 15 per cent to $631m. Dell services grew 13 per cent to $1.45bn.

In its forecast for upcoming quarters, Dell said it will continue to incur costs as it restructures, reduces headcount, and invests in infrastructure and acquisitions.

Dell said it still sees "conservatism in IT spending in the U.S. particularly with its global and large customers as well as public, small and medium business accounts." That sounds like — yes — pretty much everyone.

That conservatism will likely continue through the summer, the company said. Dell also restated it plans to reduce costs by $3bn annually by fiscal 2011. ®

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