Dell first quarter earnings crash 63 per cent

Dell’s net income fell 63 per cent to US$290 million, from net income of US$784 million in the same period last year.

Revenue was down 23 per cent, to US$12.34 billion for the period ended May 1 from US$16.08 billion last year.

“We’re continuing to transform the company on the cost side and delivering strong cash flow,” said Michael Dell, chairman and chief executive officer. “Re-establishing cost leadership and having flexibility to invest in our business will position us well as IT spending improves.

“Signals about the demand environment are mixed, but we’re preparing for what we believe will be a powerful replacement cycle, with virtualisation and managed services playing larger roles in what customers want and Dell provides.”

To that end operating costs had been cut by US$101 million from the previous quarter and US$312 million from last year’s first quarter.

The company was hit especially hard by a slowdown in business purchases: revenues from the large enterprise division were down 31 per cent and the SME division saw a drop of 30 per cent.

By contrast the company saw only a 16 per cent fall in consumer revenue and an 11 per cent drop for public sector revenues.