Feeds

Dell profits sink 17% as revenues rise

Bad Day at Round Rock

High performance access to file storage

Dell posted a surprise 17 per cent drop in profits for its fiscal second quarter, even though its revenues handily beat Wall Street estimates.

Round Rock said the earnings squeeze was a result of technology spending slowdowns and its expansion into Europe and Asia.

Net income was $616m in the quarter, down 17 per cent from a profit of $746m in the same period last year. Revenue grew 11 per cent to $16.43bn from $14.77bn year-over-year. Analysts were expecting sales of about $15.95bn.

"Strategic actions to accelerate growth in certain areas of our business affected gross margins this quarter," said Dell's CFO, Brian Gladden. Gross margins were 17.2 per cent in Q2, down almost 20 per cent from a year ago.

Dell also warned it sees "continued conservatism" for IT spending in the US, which is spreading to Western Europe and Asia.

Revenues increased year-over-year in every segment except desktops, which was essentially flat. Laptops earned Dell $4.87bn, up 26 per cent from last year. Server revenue was up 5 per cent to $1.7bn. Storage grew 11 per cent, earning $681m. Service revenue was up 14 per cent to 1.46bn. Desktop PC revenue was down 2 per cent to $4.93bn.

Dell said it's on course to reduce costs by $3bn annually by fiscal 2011. Dell reduced its headcount by 8,500 people since Q1, not counting the employees who joined from acquisitions. It also consolidated company-owned sites in the US and Canada.

But for the near future, the hardware vendor still expects its bottom line to be hit by the costs of restructuring to improve profitability.

The profit drop seems to have unsettled investors. As of this publication, Dell shares are down nearly 10 per cent in after-hours trading. ®

High performance access to file storage

More from The Register

next story
Audio fans, prepare yourself for the Second Coming ... of Blu-ray
High Fidelity Pure Audio – is this what your ears have been waiting for?
Dropbox defends fantastically badly timed Condoleezza Rice appointment
'Nothing is going to change with Dr. Rice's appointment,' file sharer promises
Nokia offers 'voluntary retirement' to 6,000+ Indian employees
India's 'predictability and stability' cited as mobe-maker's tax payment deadline nears
Apple DOMINATES the Valley, rakes in more profit than Google, HP, Intel, Cisco COMBINED
Cook & Co. also pay more taxes than those four worthies PLUS eBay and Oracle
It may be ILLEGAL to run Heartbleed health checks – IT lawyer
Do the right thing, earn up to 10 years in clink
France bans managers from contacting workers outside business hours
«Email? Mais non ... il est plus tard que six heures du soir!»
Adrian Mole author Sue Townsend dies at 68
RIP Blighty's best-selling author of the 1980s
Zucker punched: Google gobbles Facebook-wooed Titan Aerospace
Up, up and away in my beautiful balloon flying broadband-bot
Analysts: Bright future for smartphones, tablets, wearables
There's plenty of good money to be made if you stay out of the PC market
prev story

Whitepapers

Mainstay ROI - Does application security pay?
In this whitepaper learn how you and your enterprise might benefit from better software security.
Five 3D headsets to be won!
We were so impressed by the Durovis Dive headset we’ve asked the company to give some away to Reg readers.
3 Big data security analytics techniques
Applying these Big Data security analytics techniques can help you make your business safer by detecting attacks early, before significant damage is done.
The benefits of software based PBX
Why you should break free from your proprietary PBX and how to leverage your existing server hardware.
Mobile application security study
Download this report to see the alarming realities regarding the sheer number of applications vulnerable to attack, as well as the most common and easily addressable vulnerability errors.