Feeds

Dell profits sink 17% as revenues rise

Bad Day at Round Rock

Top 5 reasons to deploy VMware with Tegile

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. ®

Beginner's guide to SSL certificates

More from The Register

next story
Phones 4u slips into administration after EE cuts ties with Brit mobe retailer
More than 5,500 jobs could be axed if rescue mission fails
Driving with an Apple Watch could land you with a £100 FINE
Bad news for tech-addicted fanbois behind the wheel
Special pleading against mass surveillance won't help anyone
Protecting journalists alone won't protect their sources
Phones 4u website DIES as wounded mobe retailer struggles to stay above water
Founder blames 'ruthless network partners' for implosion
Radio hams can encrypt, in emergencies, says Ofcom
Consultation promises new spectrum and hints at relaxed licence conditions
Big Content Australia just blew a big hole in its credibility
AHEDA's research on average content prices did not expose methodology, so appears less than rigourous
EMC, HP blockbuster 'merger' shocker comes a cropper
Stand down, FTC... you can put your feet up for a bit
Vodafone to buy 140 Phones 4u stores from stricken retailer
887 jobs 'preserved' in the process, says administrator PwC
prev story

Whitepapers

Secure remote control for conventional and virtual desktops
Balancing user privacy and privileged access, in accordance with compliance frameworks and legislation. Evaluating any potential remote control choice.
Intelligent flash storage arrays
Tegile Intelligent Storage Arrays with IntelliFlash helps IT boost storage utilization and effciency while delivering unmatched storage savings and performance.
WIN a very cool portable ZX Spectrum
Win a one-off portable Spectrum built by legendary hardware hacker Ben Heck
High Performance for All
While HPC is not new, it has traditionally been seen as a specialist area – is it now geared up to meet more mainstream requirements?
Beginner's guide to SSL certificates
De-mystify the technology involved and give you the information you need to make the best decision when considering your online security options.