Dell on Thursday said the slump in demand for its personal computers has yet to reach a bottom, as the PC maker reported a 63% drop in quarterly profit and a 23% dip in revenue.
The results were the third consecutive quarter of contracting sales and profit at the embattled company.
Dell said its results were driven by weak business spending during the three months ended May 1st. It's profit was also hit by restructuring charges.
Brian Gladden, Dell's chief financial officer, said the company has yet to see "a bottom" to the prolonged slump in technology spending. "Demand is still not improving," he said.
Dell reported a 20% decline in laptop revenue and a 34% drop in desktop PCs for the quarter. The division that sells to large companies posted a 31% revenue drop. The services division revenue fell 8% to $1.2 billion.
“We’re continuing to transform the company on the cost side and delivering strong cash flow,” said Michael Dell, chairman and chief executive officer. “Re-establishing cost leadership and having flexibility to invest in our business will position us well as IT spending improves.
“Signals about the demand environment are mixed, but we’re preparing for what we believe will be a powerful replacement cycle, with virtualization and managed services playing larger roles in what customers want and Dell provides.”
Overall, Dell reported earnings of $290 million, or 15 cents a share, down from $784 million, or 38 cents a share, a year ago. The latest period included restructuring expenses of $185 million. Revenue was $12.34 billion, down from $16.08 billion.
The PC market accounts for about half of Dell's revenue.
Worldwide sales of PCs fell in the first quarter of 2009 but the US market performed better than other regional markets, US IT research firms IDC and Gartner have reported. IDC said worldwide shipments of desktop and portable PCs fell 7.1% in the first three months of the year compared with last year while Gartner said they dropped 6.5% in the quarter to 67.2 million units. HP overtook Dell in the US and maintained its No. 1 position globally.
Results detail
