Dell Inc said on Thursday that profits dived 48 percent during the fiscal fourth quarter as the recession forced consumers and businesses to spend less on technology. The company also said it expected to make further cuts to its work force.
Earnings for the quarter that ended Jan. 30 sank to US$351 million, or US$0.18 per share, from US$679 million, or US$0.31 per share, a year earlier. Excluding one-time charges, Dell would have earned US$0.29 per share, just above the US$0.26 per share expected by analysts polled by Thomson Reuters.
But sales missed Wall Street’s US$14.2 billion forecast by some distance, dropping 16 percent to US$13.4 billion from US$16 billion in the same prior-year period.
“We can’t predict how long this slowdown will last,” Dell chief financial officer Brian Gladden warned during a conference call with analysts. “We expect it to be protracted.”
Dell has been working to cut annual costs, and on Thursday Gladden said the company was targeting a US$4 billion reduction by the end of fiscal 2011, US$1 billion more than its previous goal.
Dell is struggling with the same problems it has faced over the last several quarters: over-dependence on the sinking PC market and US sales.
“I think it’s kind of more of the same. Which is better than, ‘It’s going to get a whole lot worse,’ but more of the same is not exactly great,” Shaw Wu, a Kaufman Bros analyst, said of the quarter.
Revenue declined across all of Dell’s product divisions.
Corporations based in the Americas, which make up the biggest slice of Dell’s sales, spent 17 percent less than in the prior year. Sales to companies in the rest of the world also dropped by double digits.
Dell, the second-largest computer maker after Hewlett-Packard Co, said it shipped 18 percent more computers for consumers worldwide in the quarter. But the rising popularity of netbooks — smaller, inexpensive laptops — pushed revenue from consumers down 7 percent.
During the conference call, Dell chief executive Michael Dell brushed off the idea that netbooks were hurting regular consumer laptop sales, or that they might appeal to businesspeople and represent a threat to sales to corporations, too.
But Pacific Crest Securities analyst Andy Hargreaves disagreed, and said in an interview that he believed Dell had to slash the prices of its lower-end laptops because netbooks, which can sell for US$400 or less, make it hard to sell a basic laptop for more.
For the full year, Dell said its profit sank 16 percent to US$2.48 billion, or US$1.25 per share, from US$2.95 billion, or US$1.31 per share, last year.
Revenue was flat at US$61.1 billion.
Analysts had forecast a profit of US$1.32 per share on sales of US$61.8 billion.
China has claimed a breakthrough in developing homegrown chipmaking equipment, an important step in overcoming US sanctions designed to thwart Beijing’s semiconductor goals. State-linked organizations are advised to use a new laser-based immersion lithography machine with a resolution of 65 nanometers or better, the Chinese Ministry of Industry and Information Technology (MIIT) said in an announcement this month. Although the note does not specify the supplier, the spec marks a significant step up from the previous most advanced indigenous equipment — developed by Shanghai Micro Electronics Equipment Group Co (SMEE, 上海微電子) — which stood at about 90 nanometers. MIIT’s claimed advances last
ISSUES: Gogoro has been struggling with ballooning losses and was recently embroiled in alleged subsidy fraud, using Chinese-made components instead of locally made parts Gogoro Inc (睿能創意), the nation’s biggest electric scooter maker, yesterday said that its chairman and CEO Horace Luke (陸學森) has resigned amid chronic losses and probes into the company’s alleged involvement in subsidy fraud. The board of directors nominated Reuntex Group (潤泰集團) general counsel Tamon Tseng (曾夢達) as the company’s new chairman, Gogoro said in a statement. Ruentex is Gogoro’s biggest stakeholder. Gogoro Taiwan general manager Henry Chiang (姜家煒) is to serve as acting CEO during the interim period, the statement said. Luke’s departure came as a bombshell yesterday. As a company founder, he has played a key role in pushing for the
EUROPE ON HOLD: Among a flurry of announcements, Intel said it would postpone new factories in Germany and Poland, but remains committed to its US expansion Intel Corp chief executive officer Pat Gelsinger has landed Amazon.com Inc’s Amazon Web Services (AWS) as a customer for the company’s manufacturing business, potentially bringing work to new plants under construction in the US and boosting his efforts to turn around the embattled chipmaker. Intel and AWS are to coinvest in a custom semiconductor for artificial intelligence computing — what is known as a fabric chip — in a “multiyear, multibillion-dollar framework,” Intel said in a statement on Monday. The work would rely on Intel’s 18A process, an advanced chipmaking technology. Intel shares rose more than 8 percent in late trading after the
GLOBAL ECONOMY: Policymakers have a choice of a small 25 basis-point cut or a bold cut of 50 basis points, which would help the labor market, but might reignite inflation The US Federal Reserve is gearing up to announce its first interest rate cut in more than four years on Wednesday, with policymakers expected to debate how big a move to make less than two months before the US presidential election. Senior officials at the US central bank including Fed Chairman Jerome Powell have in recent weeks indicated that a rate cut is coming this month, as inflation eases toward the bank’s long-term target of two percent, and the labor market continues to cool. The Fed, which has a dual mandate from the US Congress to act independently to ensure