Dell on Thursday reported a 5% drop in net income and a 3% fall in revenue for its fiscal third quarter.
The global No. 2 PC maker by revenue, said it expected the current challenging environment to continue.
Earnings per share increased 9% to 37 cents, on revenue of $15.2 billion. Operating income improved 22% to $1 billion, or 6.7% of revenue, driven by gross margins of 18.8%, which benefited from an improved mix of products and services, lower component costs, and continued progress on cost-reduction initiatives announced in April.
“Our business model adapts quickly to economic changes, even the kind of significant challenge we saw in the third quarter,”said Michael Dell, Chairman and CEO.“We increased profitability with an improved mix of products and services – more than a third of our revenue and profit now comes from servers, storage, services and software and peripherals – and benefited from initiatives to improve our competiveness, including tight cost controls.
“During previous periods of economic challenge, Dell led in providing customers the technology they want and the value they need, and we’re doing it again. We're simplifying IT, reducing costs and maximizing productivity for customers.”
Dell's earnings beat downbeat Wall Street forecasts, thanks to cost cuts and share buybacks. The shares rose 5% in late trading to $10.30, after closing down 5% in normal trading on the Nasdaq Stock Market.
Revenue for the quarter from outside the US was 48% of Dell’s total revenue. For the BRIC countries of Brazil, Russia, India and China, revenue increased 20% and shipments 43%. They accounted for 9%of Dell’s global revenue.
Dell gets about 60% of its revenue from PCs, while Hewlett-Packard gets about a third of its revenue from PCs. So Dell is more vulnerable to the fourth quarter drop in PC demand from business and consumers, in the US.
Results detail
