Dell Profit Falls, Tops Expectations

posted: 166 DAYS 14 HOURS AGO

filed under: Earnings, Investing, Tech News

Text SizeAAA

SAN FRANCISCO (Aug. 27) - Dell Inc.'s second-quarter profit was whacked 23 percent as the personal-computer 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 $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.

Dell's sales to corporations fell 32 percent from last year to $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 $472 million, or 24 cents per share, in the three months ended July 31. That compares with profit of $616 million, or 31 cents per share, in the year-ago period.

The latest profit figure includes 4 cents per share in pretax expenses connected to Dell's ongoing restructuring.

Sales fell 22 percent to $12.8 billion.

Analysts polled by Thomson Reuters expected profit of 23 cents per share on $12.6 billion in sales.

The figures were released early, right before the market closed, and Dell stock jumped 6.7 percent to end regular trading up 98 cents at $15.65.

Copyright 2009 The Associated Press. The information contained in the AP news report may not be published, broadcast, rewritten or otherwise distributed without the prior written authority of The Associated Press. Active hyperlinks have been inserted by AOL.

2009-08-27 06:14:51