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Dell falls short of predictions, reports Q4 drop

Dell Inc's fourth-quarter profit dropped 6.4 percent and fell short of Wall Street expectations, and the personal computer maker said that more cautious spending by customers and higher costs could hurt its business.

The Round Rock, Texas-based company said it earned US$679 million, or US$0.31 per share in the quarter ended Feb. 1, down from US$726 million, or US$0.32 per share, in the same period a year ago.

Analysts surveyed by Thomson Financial had predicted a profit of US$0.36 per share.

Sales at the world's No. 2 PC maker jumped 10.5 percent to US$15.99 billion, but that was below the US$16.27 billion that analysts had expected.

Dell shares rose US$0.10, to US$20.87, before the report was released. In extended trading, they were down US$0.87, or 4 percent.

Chief financial officer Donald Carty said in an interview that the company had restored growth in key areas, including notebook computers and emerging markets.

But he acknowledged that Dell "saw a little slowing down" in big US accounts, particularly financial-services customers.

Carty said Dell gained share in the consumer market even though some deals, such as Best Buy Co, occurred too late to add much to fourth-quarter sales.

Carty said that the benefits would be more obvious in the current quarter, which ends next month.

Dell sells desktop and notebook computers in more than 10,000 stores. Hewlett-Packard Co, which eclipsed Dell to become the world's largest PC maker in 2006, sells in 80,000 stores.

Dell is also trying to lure consumers by adding colors such as flamingo pink to its laptop lineup.

Founder Michael Dell, who returned as CEO in January last year after the company's growth slowed, has said that as innovation slows in PCs, style is likely to become more important to potential consumers.

Dell announced this month that it would cut 1,200 jobs, mostly at a call center in Canada. Carty said the company would continue to cut costs, with a goal of eventually cutting annual spending by US$3 billion to US$4 billion.

Dell stock slumped late last year, falling nearly 35 percent during the fourth quarter. Its shares have moved down over the past three years, while Hewlett-Packard's have gained.

For the fiscal year that just ended, Dell earned US$2.95 billion, up US$2.58 billion from the year before.

Revenue rose 6.5 percent, to US$61.13 billion.
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