Dell profit falls 47 percent hurt by slow tech spending

Thu Nov 15, 2012 5:37pm EST
 
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By Poornima Gupta

SAN FRANCISCO (Reuters) - Dell Inc's profit slid 47 percent, hurt by lower PC sales and weaker demand from large corporations, but the No. 3 personal computer maker said it expects revenue to grow as much as 5 percent in the current quarter.

Dell shares fell 2.3 percent in after-hours trade. The company, once the world's top PC maker and a pioneer in computer supply chain management, is struggling to defend its market share against Asian rivals like Lenovo. It is trying to bolster growth by focusing on products and services to corporations.

The company founded by Chief Executive Michael Dell warned that it "sees the challenging global macro-economic environment continuing in the fourth quarter."

Dell said revenue in its fiscal third quarter fell 11 percent to $13.7 billion, slightly lower than the average analyst estimate of $13.89 billion according to Thomson Reuters I/B/E/S.

It posted net income of $475 million or 27 cents a share in the fiscal third quarter, compared with $893 million or 49 cents a year earlier. Excluding certain items, it earned 39 cents a share, compared to an average forecast for 40 cents.

Chief Financial Officer Brian Gladden said in an interview that corporate customers continue to defer technology spending.

"It's not clear what's going to cause them to increase their spending in the short term, given the uncertainty in the economy," he said.

Dell's enterprise solutions revenue rose 3 percent to $4.8 billion, while server and networking revenue climbed 11 percent. In contrast, consumer revenue plummeted 23 percent to $2.5 billion, underscoring the plight of the broader PC market, and sales to large corporation declined 8 percent to $4.2 billion in the quarter.   Continued...

 
A man wipes the logo of the Dell IT firm at the CeBIT exhibition centre in Hannover in this February 28, 2010 file photo. REUTERS/Thomas Peter/Files