Dell Inc’s second-quarter profit was whacked 23 percent as the PC industry’s slump dragged on this summer. The results beat Wall Street’s forecast, however, sending the shares up more than 6 percent.
Dell’s results reinforce a trend outlined in the latest numbers from rival Hewlett-Packard Co, the world’s No. 1 PC seller, and supplier Intel Corp, the biggest computer chip maker: Consumer demand for PCs is perking up, but spending by corporations is still weak.
Dell’s shipments of consumer PCs increased 17 percent over last year, while revenue in that category was down 9 percent to US$2.9 billion.
Price-cutting explains the discrepancy. PC makers have been slashing prices to preserve market share. Consumers also have been favoring little “netbook” laptops that generate lower profit margins for manufacturers.
ANEMIC SPENDING
Dell’s sales to corporations fell 32 percent from last year to US$3.3 billion.
Round Rock, Texas-based Dell is especially vulnerable to anemic business spending, because 80 percent of its revenue comes from corporations, government agencies and other institutions.
Dell’s profit was US$472 million, or US$0.24 per share, in the three months ended on July 31, compared with profit of US$616 million, or US$0.31 per share, in the same period last year.
The latest profit figure includes US$0.04 per share in pretax expenses connected to Dell’s ongoing restructuring.
Sales fell 22 percent to US$12.8 billion.
Analysts polled by Thomson Reuters had expected profit of US$0.23 per share on US$12.6 billion in sales.
Analysts generally exclude one-time charges, like restructuring charges, from their estimates.
STOCKS SURGE
Dell’s latest numbers were released early, right before the market closed, and Dell stock jumped 6.7 percent to end regular trading up US$0.98 at US$15.65.
Dell is trying to save US$4 billion a year in a major makeover as it tries to hold its ground against mounting threats from rivals. HP and No. 3 PC vendor Acer Inc (宏碁) have both gained market share while Dell’s share has slipped.
One way Dell is saving money is by trimming staff. After a deep round of layoffs, the company’s head count fell by 9,300 last year to 78,900 at the end of January. Dell is also changing the way its computers are designed, made and sold, relying now more on contract manufacturers and retailers.
The restructuring has also included an overhaul of how Dell’s business units are organized.
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