Dell's net income, revenue drop for second quarter

But the company expects a strong second half of the fiscal year with heightened demand for its products

Dell on Thursday reported a drop in net income and revenue during the second fiscal quarter of 2010 compared to the same period last year, but said that it anticipates that the global economy will improve and IT spending will be strong in the second half of this year.

The PC maker reported net income of $US472 million for the quarter that ended on July 31, a 23 percent drop from last fiscal year's second quarter.

Earnings per share were $US0.24, which beat estimates of $US0.23 based on projections of analysts polled by Thomson Reuters.

The company had sequential improvement in both net income and revenue compared to the previous quarter, Dell said. Net income grew by 63 percent compared to the first quarter of 2010. Revenue grew by 4 percent sequentially.

Dell reported revenue of $US10.6 billion, a year-over-year drop of 22 percent and short of analyst expectations of $US12.6 billion.

The company's revenue dove year-over-year across all segments, including the mobility market, which includes laptops, and in the desktop PC category.

Mobility revenue was $US3.9 billion, a 21 percent yearly drop, and recorded no sequential quarterly gains.

Desktop PC revenue was $US3.3 billion, a 33 percent yearly drop, but 5 percent growth sequentially.

CEO Michael Dell expressed optimism about the upcoming quarters. If current trends in demand continue, the company expects revenue will be better in the second half of the fiscal year than it was in the first, he said in a statement.

In July, the company said that demand for products was stabilizing. Dell also has undertaken a plan to cut costs by $US4 billion by the end of fiscal 2011, a change from $US3 billion in cost cuts it had announced in May.

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Agam Shah

IDG News Service
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