PC maker Dell Inc said on Thursday that its third-quarter profit fell 5 percent as businesses around the world bought fewer computers and other technology products.
Dell’s earnings dipped to US$727 million in the quarter that ended on Oct. 31, down from US$766 million a year ago.
However, earnings per share rose 9 percent from last year to US$0.37 per share, as Dell bought back shares, slashed operating expenses and improved margins.
Earnings were US$0.06 better than analysts were expecting, a Thomson Reuters poll showed.
Sales slipped 3 percent to about US$15 billion, shy of analyst expectations for US$16.2 billion, dragged down by slower spending by corporations.
In the Americas, Dell’s largest region for sales to businesses, revenue dropped 8 percent.
Dell’s sales grew at a reasonable pace in August, but fell off in September and last month, chief financial officer Brian Gladden said during a conference call.
“We expect the challenging environment to continue,” he said.
He also said Dell decided not to follow some competitors who slashed prices deeply in areas of the US. and elsewhere. The choice hurt the top line, but helped preserve profit.
In one bright spot, Dell’s consumer PC revenue increased 10 percent worldwide as unit shipments jumped 32 percent. Dell does not break out US consumer sales, but Gladden said that “the US was a strong part of the good performance.”
However, Dell’s consumer sales account for less than a fifth of the company’s total, and the solid performance wasn’t able to offset trouble in the corporate business.
Dell also lacks the product diversity enjoyed by its biggest rival, Hewlett-Packard Co, which announced this week that it would exceed analysts’ forecasts for its most recent quarter.
Shares of Dell jumped 5 percent to US$10.30 in extended trading, after falling 5 percent to close at US$9.81 before the earnings report came out.
Retrenching as it tries to deal with the economic uncertainty, Dell has been on a cost-cutting campaign.
The Round Rock, Texas-based company eliminated 2,200 jobs in the quarter and has slashed about 9 percent of its work force in the past year.
As part of an effort to save money, Dell is reviewing its supply chain and manufacturing costs, but did not give an update on Thursday about possible factory closures.
Dell’s gross margin improved in the quarter, as lower headcount helped push operating expenses down 11 percent from the previous year.
Lower component costs also helped, as did a modest uptick in sales of software and services, which are more profitable than hardware.
Michael Dell, the chief executive officer, said Dell would continue to aggressively cut costs and choose stronger profits over grabbing market share from its competitors by lowering prices.
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