Dell Q2 net down 23% to $472 mn

PC maker Dell today reported a 23-per cent slump in net profit to $472 million in the second-quarter of the current fiscal due to declining sales.

In comparison, the company had a net profit of $616 million in the year-ago period, Dell said in a statement.

Revenues declined to $12.76 billion in the second quarter ended July 31, 2009 from $16.43 billion in the same quarter last fiscal.

However, Dell continues to build its emerging country presence as combined revenue from the BRIC countries—Brazil, Russia, India and China grew 16 per cent sequentially. Sales in BRIC countries comprise 10 per cent of company's total revenue.

 

During the quarter, Dell's shipments of consumer PCs surged 17 per cent over the previous year, while revenue in that segment was down 9 per cent to $2.9 billion.

Dell's combined revenue from servers and storage was up 7 per cent sequentially, while its revenue stood at $12.8 billion in the second quarter of FY'10, 22 per cent lower than the year-ago quarter.

In the third quarter, the company expects seasonal demand improvements from consumer and US federal government businesses, but the quarter is generally a period of slower demand from large commercial customers in the US and Europe.

"Dell believes a refresh cycle in commercial accounts is more likely to occur in 2010, with IT spending improving first in the US," the company said.

Cash flow from operations was $1.1 billion, as Dell ended the quarter with $12.7 billion in cash and investments.

The company has launched its $4 billion cost initiatives process last fiscal year, since then about 70 per cent of Dell's total product volume has been redesigned and optimised to reduce costs.

"We have been reducing complexity in our organisation and significantly lowering operating costs, in anticipation of improvement in the global economy and IT spending.

"If current demand trends continue, we expect revenue for the second half of the year to be stronger than the first half," company chairman and chief executive officer Michael Dell said.