New Delhi: The world's third largest
personal computer maker Dell Inc has reported a massive 54 per
cent decline in its profit during the third quarter ended
October 30, despite seeing an uptick in sales from India and
China.
Dell's net profit for the three months to October 30,
2009 was USD 337 million, down from USD 727 million in the
same quarter last year, the company said Thursday.
Revenue also declined by 15 per cent to USD 12.9 billion
compared to USD 15.2 billion in the same period last year, it
added.
Analysts were expecting better results as almost all its
peers posted better than expected Q3 results. Dell shares fell
six percent following the results on Nasdaq in pre-market
trade but closed the day down by 1.18 percent to USD 15.87 on
Thursday. The company also saw a decline in gross margin that
disturbed the market.
Much of the growth came from the emerging markets such as
India and China. Combined sales from China, India, Brazil and
Russia were up 18 per cent sequentially and 5 per cent over
the past year. In India, sales increased by 17 per cent during
the reporting period.
"Asia-Pacific is the strongest region. Almost all
Asia-Pacific countries have better than average growth, with
the exception of Japan. Asia would continue to drive much of
the company's growth in the near future," Dell president
for small and medium business Steve Felice said.
Dell said that its core business of selling computers to
enterprises is returning, after a sharp drop during the global
downturn. However, Dell has been feeling the downturn longer
than most companies, largely because corporations that account
for 80 per cent of its revenues were among the first to cut
back their budgets. Consumer business forms only 20 per cent
of the overall business of the company.
"A lot of the recovery this time has been in the consumer
sector, so it's not surprising to see our recovery is
a bit slower," Felice said.
Dell chairman of the board and chief executive
Michael Dell said, "we are seeing improvement in overall
underlying IT demand that is continuing into the fourth
quarter. The launch of Windows7 is being very well received by
SMBs and consumers, and we will see the benefits of that more
fully in our Q4."
For the fourth quarter, Dell expects seasonal demand
improvement in its consumer business, while demand in public
is typically lower during the quarter. "The company expects
fourth quarter revenue to improve over the third quarter,"
Felice added.
Business dependent
Dell, which relies primarily on sales of PCs to businesses, has suffered as companies dialled back spending during the economic downturn. Acer and HP have also been waging a price war, analysts say, particularly in consumer laptops.
Sales in Dell's large enterprise business fell 23 percent in the quarter, the most of any unit. Sales of desktop PCs, which make up around a quarter of revenue, slid 26 percent.
Dell did not provide a formal outlook for the critical holiday-season quarter, though it said it expects revenue to be better than the third quarter, with its consumer business showing seasonal improvement.
Dell said it was seeing improved signs from commercial customers, which make up 80 percent of its sales.
"We have seen share losses that, frankly, should reverse themselves when commercial comes back in a refresh cycle. So I think just by nature of our mix you will see our overall share position improved," said Gladden.
Excluding restructuring and amortization charges, profit per share was 23 cents in the third quarter. Analysts were expecting earnings per share of 28 cents, excluding items, but it was not immediately clear if that was directly comparable.
Shares of Round Rock, Texas-based Dell, which are up around 50 percent this year, fell to $14.91 in extended trading, after closing at $15.87 on Nasdaq.
PTI
First Published: Friday, November 20, 2009, 18:23