Dell earnings down 17 percent (CNET)
By Erica Ogg, CNET 1 hour, 11 minutes ago
Dell on Thursday reported its second-quarter results, and the company admitted it had more work to do to improve its performance.
Its second quarter profits were down 17 percent to $616 million, from $746 million a year ago. Dell reported earnings of 31 cents per share, missing analysts' expected 36 cents per share.
Revenue was $16.43 billion for the quarter, an 11-percent increase from a year ago. That was helped by a big boost in shipments of the company's hardware--up 19 percent worldwide.
But Wall Street didn't like what it heard: Dell's stock was down more than 10 percent to $22.50 in after-hours trading.
New CFO Brian Gladden presided over his first earnings call for Dell--CEO Michael Dell was not on the line.
Despite lower-than-expected profits, Gladden called it "a great growth quarter" for Dell. The cost of growth in Europe in particular, he said was partly to blame for this quarter's results. In other words, in an attempt to gain share in both consumer and enterprise markets Dell spent more than it did last year.
With shipments up in all markets, they say it's working. Specifically, Gladden pointed out server and notebooks. Servers shipments increased 19 percent, and notebooks 44 percent. The company has increased its global retail presence from basically nothing a year ago to having its products on shelves in major electronics chains in the U.S., Europe, China, India, and more.
But a bigger issue for the IT industry in general is the current conservative spending climate. Gladden said its business with large corporate customers and state and local governments has seen the most slowing.
"But it's conservatism that's been relatively consistent for the last six months," he said. It jibes with what rival Hewlett-Packard reported during its earnings call last week, when CEO Mark Hurd said it didn't see much of a change between last quarter and the current quarter.
Gladden said repeatedly that there was "more work to be done," to improve profitability and decrease costs. To that end, Dell still isn't done with layoffs. The company said in early 2007 it had a goal of lowering headcount by 8,900. Right now, they've reduced by 8,500. The last 400 will be gone by the third quarter, according to Gladden.
More to come.