Dell 3Q profit falls as PC spending slows

Dell’s earnings dipped to US$727 million in the quarter that ended Oct. 31, down from US$766 million a year ago. However, earnings per share rose 9 percent from last year to 37 cents per share, as Dell slashed operating expenses, improved margins and bought back shares.

Earnings were 6 cents better than analysts were expecting, according to a Thomson Reuters poll.

Sales slipped 3 percent to about US$15 billion, shy of analyst expectations for US$16.2 billion, dragged down by slower spending by corporations.

“Dell managed its business well, but clearly, the overall economic environment is making it difficult for them,” said Gartner Inc. analyst Charles Smulders.

In the Americas, Dell’s largest region for sales to businesses, revenue dropped 8 percent as companies scrutinized their budgets.

Dell grew at a reasonable pace in August, but sales fell off in September and October, Chief Financial Officer Brian Gladden said during a conference call.

“We expect the challenging environment to continue,” Gladden said.

The CFO also said Dell decided not to follow some competitors who slashed prices deeply in areas of the U.S. and elsewhere. The choice hurt the top line, but helped preserve profit.

In one bright spot, Dell’s consumer PC revenue increased 10 percent worldwide as unit shipments jumped 32 percent. Dell does not break out U.S. consumer sales, but Gladden said that “the U.S. was a strong part of the good performance.”

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