Dell Inc said on Thursday its fiscal first-quarter profit fell 63 percent as the recession continued to crimp computer sales around the world.
The results, coupled with a cautious outlook from the world’s top PC seller, Hewlett-Packard Co, indicate that the computer market has not improved much since last year’s economic meltdown led to a holiday season that was the industry’s worst stretch in six years.
Dell’s earnings for the three months that ended May 1 sank to US$290 million, or US$0.15 per share, from US$784 million, or US$0.38 per share, in the same period last year.
The most recent results included a US$0.9 charge from closing facilities and paying severance to laid-off workers. Excluding the charge, Dell earned US$0.24 per share, or a penny better than analysts had predicted, a Thomson Reuters survey showed.
Sales dropped 23 percent to US$12.3 billion, lower than the US$12.6 billion analysts had predicted for Round Rock, Texas-based Dell.
In a conference call, chief financial officer Brian Gladden said sales picked up toward the end of the quarter, but that is normal for the time of year. Gladden said this month was no better than the first quarter and looking ahead he said orders and conversations with customers show “mixed signals.”
“We would hope that we would see improved demand in the later part of the year,” Gladden said. “Hopefully sooner versus later.”
Hewlett-Packard’s chief executive, Mark Hurd, has expressed similar caution. Speaking at an investor conference on Thursday, Hurd would not say when he thought the PC market would begin to rebound.
That is in contrast to Paul Otellini, the CEO of Intel Corp, the world’s biggest supplier of PC microprocessors, who has said sales already appear to have bottomed out and returned to normal seasonal patterns.
At Dell, sales of laptops and the smaller, less powerful netbooks, which together make up Dell’s largest product category, fell 20 percent in the quarter. Recession-weary shoppers’ preference for netbooks and low-end PCs dragged average prices down 8 percent.
Revenue from large enterprises and small and medium-sized businesses worldwide fell about 30 percent. Consumer sales dropped 16 percent.
US revenue, which accounts for 52 percent of Dell’s total, declined 21 percent, as did revenue in its Asia Pacific-Japan segment. Sales fell a steeper 29 percent in Europe, the Middle East and Africa combined. In Brazil, Russia, India and China, the so-called “BRIC” countries, revenue fell 21 percent.
Despite the PC maker’s uncertainty about the market, CEO Michael Dell said he expects big businesses to replace many workers’ computers next year, with the release of Microsoft Corp’s next operating system, Windows 7.
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