Dell's profit drops 63 percent, but beats estimates by a penny
Filed under: Company News, Technology, Earnings
Dell (DELL) said earnings fell 63 percent in its fiscal first quarter. Even so, its profit beat analyst estimates by a cent, helped in good measure by cost cutting.Profit fell because personal computer sales have been declining for the Round Rock, Texas-based PC maker.
Sales dropped 23 percent, missing analyst estimates, to $12.3 billion. Shares of Dell, higher by 12 percent this year, were up slightly in after hours trading.
"We're continuing to transform the company on the cost side and delivering strong cash flow," CEO Michael Dell said in a press release Thursday. Dell ended the quarter with $10.7 billion in cash and investments. The PC-maker is cutting jobs and moving manufacturing to save $4 billion in costs in the next two years.
The Dell chief said the company is "re-establishing cost leadership" to position the company for the time when "spending improves." The company said demand remains "mixed" and the "broader environment is still challenging."
"They were light on revenue compared to our expectations, and it appears pricing continues to pressure them," Shannon Cross, an analyst at Cross Research, told Bloomberg News. She has a hold rating on Dell.
First-quarter net income fell to $290 million, or 15 cents a share, from $784 million, or 38 cents, a year earlier. Excluding some costs, profit was 24 cents a share, a penny better than the 23 cents predicted by analysts. Sales missed the $12.7 billion expected by a consensus of analysts polled in a Thomson Reuters survey.
Desktop PC sales fell 34 percent to $3.16 billion in the quarter, which ended May 1, while laptop sales fell 20 percent to $3.88 billion.
"We're not comfortable talking about seeing a bottom at this point." CFO Brian Gladden said on a call with reporters. His comments are similar to what Hewlett-Packard (HPQ) said last week.
Anthony Massucci is a senior writer for DailyFinance. You may follow him on Twitter at hianthony.



























Reader Comments (Page 1 of 1)
5-28-2009 @ 10:05PM
LindaC said...
Bet those numbers were cooked, woun't be surprised when they file chapter 11.
Reply
5-28-2009 @ 10:05PM
Joe said...
I'm surprised Dell is still in business! I have been experiencing my own nightmare with that company, which started over 2 years ago. It was my second purchase and will be my last. They delivered more than I bargained for, with a $1400. purchase after 24 months of payments and I paid them $900. toward the laptop... they claim I owe them $1400 plus! How's that math I asked? They said.. read the fine print, you've been paying 27% interest, and you haven't paid any of the principal. I need Dell and Dell Financial like I need a STD. What company will defend usery like that, when I had not a clue, they'd be so much fun to work with? I wouldn't recommend them to North Korea, they'd just get us into war with that country. Dell best look closely at how they treat their buying public, because payback is like a promise, in this economy.. those who use, get their due, and I hope Dell falls like a ton of bricks! Sorry, just venting.. but I'm totally feeling screwed by DELL & DELL FINANCIAL.!!!! learn from others mistakes...! Stay far from that Company!
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5-29-2009 @ 7:20AM
cavuto said...
the market is scared to have a pull back...wall street thinks everyone will dump their shares if they do...profits for most companies are down 30% to 60%...obama is trying to instill artificial confidence in this market..now he is trying to foolishly get people to buy houses and cars by scaring them with higher interest rates...( i better go buy a house now that interset rates are going up)..i say don't buy a thing...force the goverment to bring down interest rates and also it will bring down home prices further..use your head!!
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5-29-2009 @ 7:39AM
Gary said...
Beware of the irrational doomsdayer comments from those who offer nothing but their own political dribble. The economy is improving, much to the chagrin of those who are politically motivated to hope for failure. Those who say we are headed to disaster should move to Europe or Russia now, so that the rest of us can begin planning our future without the negativity of these people who offer nothing but criticism with no intellectual basis of fact.
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5-29-2009 @ 8:03AM
Givra said...
To "Joe", poster #2:
I do feel for your situation, but at the same time, if I had to guess it sounds like you paid the minimum due each month on the credit line or credit card issued by Dell. The minimum due on any credit card or small loan like that will just be the interest. Just to be honest, one never pays just the minimum due on such if you can afford it at all to pay off a loan. I'd of course have to see your loan and the terms, but this is what I suspect.
Having said that, 27 percent interest is pretty absurd. Have you looked into getting a credit line or even using a credit card with lower interest rates to pay off that loan? Sure, you'd still owe $1400.00, but at least it would be at a lower rate. Far from an ideal solution, but a lower rate might let you pay that off.
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5-29-2009 @ 8:12AM
kenny said...
i recently purchased a dell laptop xps computer at a cost of $1736.35 when i received i t in april it did not work ,after many hours on the phone with dell techs they finally agreed i needed send to them for repair this was done on may 3 i have received a bill but i still do not have laptop back it is still being repaired or looked at by them but they want paid i will not pay for something i do not have and has never worked . I have requested to speak to a manager several times in hope of getting a u.s.a. rep. which i have not at this point been able to talk to about the problem in an effort to resolve the issue without getting lawyers involved which i see coming in the near future. this company is on the way out WARNING BEWARE OF DELL OR HELL.
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