Dell Inc said on Thursday that profits dived 48 percent during the fiscal fourth quarter as the recession forced consumers and businesses to spend less on technology. The company also said it expected to make further cuts to its work force.
Earnings for the quarter that ended Jan. 30 sank to US$351 million, or US$0.18 per share, from US$679 million, or US$0.31 per share, a year earlier. Excluding one-time charges, Dell would have earned US$0.29 per share, just above the US$0.26 per share expected by analysts polled by Thomson Reuters.
But sales missed Wall Street’s US$14.2 billion forecast by some distance, dropping 16 percent to US$13.4 billion from US$16 billion in the same prior-year period.
“We can’t predict how long this slowdown will last,” Dell chief financial officer Brian Gladden warned during a conference call with analysts. “We expect it to be protracted.”
Dell has been working to cut annual costs, and on Thursday Gladden said the company was targeting a US$4 billion reduction by the end of fiscal 2011, US$1 billion more than its previous goal.
Dell is struggling with the same problems it has faced over the last several quarters: over-dependence on the sinking PC market and US sales.
“I think it’s kind of more of the same. Which is better than, ‘It’s going to get a whole lot worse,’ but more of the same is not exactly great,” Shaw Wu, a Kaufman Bros analyst, said of the quarter.
Revenue declined across all of Dell’s product divisions.
Corporations based in the Americas, which make up the biggest slice of Dell’s sales, spent 17 percent less than in the prior year. Sales to companies in the rest of the world also dropped by double digits.
Dell, the second-largest computer maker after Hewlett-Packard Co, said it shipped 18 percent more computers for consumers worldwide in the quarter. But the rising popularity of netbooks — smaller, inexpensive laptops — pushed revenue from consumers down 7 percent.
During the conference call, Dell chief executive Michael Dell brushed off the idea that netbooks were hurting regular consumer laptop sales, or that they might appeal to businesspeople and represent a threat to sales to corporations, too.
But Pacific Crest Securities analyst Andy Hargreaves disagreed, and said in an interview that he believed Dell had to slash the prices of its lower-end laptops because netbooks, which can sell for US$400 or less, make it hard to sell a basic laptop for more.
For the full year, Dell said its profit sank 16 percent to US$2.48 billion, or US$1.25 per share, from US$2.95 billion, or US$1.31 per share, last year.
Revenue was flat at US$61.1 billion.
Analysts had forecast a profit of US$1.32 per share on sales of US$61.8 billion.
MULTIFACETED: A task force has analyzed possible scenarios and created responses to assist domestic industries in dealing with US tariffs, the economics minister said The Executive Yuan is tomorrow to announce countermeasures to US President Donald Trump’s planned reciprocal tariffs, although the details of the plan would not be made public until Monday next week, Minister of Economic Affairs J.W. Kuo (郭智輝) said yesterday. The Cabinet established an economic and trade task force in November last year to deal with US trade and tariff related issues, Kuo told reporters outside the legislature in Taipei. The task force has been analyzing and evaluating all kinds of scenarios to identify suitable responses and determine how best to assist domestic industries in managing the effects of Trump’s tariffs, he
TIGHT-LIPPED: UMC said it had no merger plans at the moment, after Nikkei Asia reported that the firm and GlobalFoundries were considering restarting merger talks United Microelectronics Corp (UMC, 聯電), the world’s No. 4 contract chipmaker, yesterday launched a new US$5 billion 12-inch chip factory in Singapore as part of its latest effort to diversify its manufacturing footprint amid growing geopolitical risks. The new factory, adjacent to UMC’s existing Singapore fab in the Pasir Res Wafer Fab Park, is scheduled to enter volume production next year, utilizing mature 22-nanometer and 28-nanometer process technologies, UMC said in a statement. The company plans to invest US$5 billion during the first phase of the new fab, which would have an installed capacity of 30,000 12-inch wafers per month, it said. The
‘SWASTICAR’: Tesla CEO Elon Musk’s close association with Donald Trump has prompted opponents to brand him a ‘Nazi’ and resulted in a dramatic drop in sales Demonstrators descended on Tesla Inc dealerships across the US, and in Europe and Canada on Saturday to protest company chief Elon Musk, who has amassed extraordinary power as a top adviser to US President Donald Trump. Waving signs with messages such as “Musk is stealing our money” and “Reclaim our country,” the protests largely took place peacefully following fiery episodes of vandalism on Tesla vehicles, dealerships and other facilities in recent weeks that US officials have denounced as terrorism. Hundreds rallied on Saturday outside the Tesla dealership in Manhattan. Some blasted Musk, the world’s richest man, while others demanded the shuttering of his
Taiwan’s official purchasing managers’ index (PMI) last month rose 0.2 percentage points to 54.2, in a second consecutive month of expansion, thanks to front-loading demand intended to avoid potential US tariff hikes, the Chung-Hua Institution for Economic Research (CIER, 中華經濟研究院) said yesterday. While short-term demand appeared robust, uncertainties rose due to US President Donald Trump’s unpredictable trade policy, CIER president Lien Hsien-ming (連賢明) told a news conference in Taipei. Taiwan’s economy this year would be characterized by high-level fluctuations and the volatility would be wilder than most expect, Lien said Demand for electronics, particularly semiconductors, continues to benefit from US technology giants’ effort