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Dell profits plunge by nearly 50 percent

Cost-cutting measures announced

Dell's net income dropped 48 percent for the fourth quarter, with the current financial climate and reduced spending on IT taking its toll on the company.

Dell said it is increasing its cost-cutting goal to $4bn by the end of fiscal 2011 as it tries to come to terms with the recession.

The company recorded net income of $351 million for the fourth quarter ended January 30, a 48 percent drop from the $679m it recorded in last year's fourth quarter. Net income per share was $0.18. Analysts polled by Thomson Reuters expected net income of $496 million.

Revenue fell to $13.4bn, a 16 percent drop from a year ago, and short of analyst estimates of $14.2bn.

The company now aims to reduce costs by $4bn by the end of fiscal 2011, a change from the original target of $3bn announced in May.

The steps Dell has taken in the past to cut costs include compensation reduction, staff cuts, restructuring its product design and distribution, and realigning its manufacturing strategy by shutting down factories.

"Within our business, we're being very disciplined in managing costs, generating profitability and cash flow, and investing in ways that separate Dell from others today and when the economy inevitably improves," Dell said.


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