DELL REPORTED markedly mixed results for its fiscal second quarter on Thursday, saying that profits fell 17 per cent even as revenues grew 11 per cent and it regained market share.

The world's second largest PC maker saw revenues in the three months ended August 1st increase to $16.4 billion, up from $14.8 billion in the same period last year. Net income in the quarter dropped year over year to $616 million, or 31 cents per share, down from $746 million, or 33 cents per share.

The company's gross margins fell five per cent in the quarter as it spent more to flog systems outside of the US. It also charged $27 million for intangible asset amortisation and $25 million for restructuring costs including expenses due to layoffs of over 8,500 employees this year.

CFO Brian Gladden said in a statement, "We are making progress in improving productivity and reducing costs." However, the company also forecast that it would continue to, "incur costs as it realigns its business to improve competitiveness, reduce head count and invest in infrastructure and acquisitions." Dell wants to cut $3 billion in costs by the end of fiscal 2011.

Dell's lacklustre second fiscal quarter results came even as it continued regaining market share since December 2007 and increased server shipments from April through June over 24 per cent, closing in on server market leader HP by 3.4 per cent, according to Gartner.

Dell said it was seeing the recent slowdown in US IT spending spreading to European and Asian markets. Its revenues outside the US exceeded US sales for the first time in its first fiscal quarter of this year, and it still plans to offset slower US sales with growth overseas.

This week the company announced lower cost notebooks and desktops aimed at businesses in the emerging markets of Europe, Africa, Latin America and Asia.

Dell's earnings didn't meet forecasts and its shares fell more than 10 per cent on Thursday. µ

L'Inq
Informationweek