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Dell profits down 63% due to PC sales slump

Restructuring charge also to blame

Dell has reported a 63 percent fall in net income during the first quarter of 2010, triggered partly by reduced PC sales and a restructuring charge related to cost cutting.

The company posted net income of $290 million for the quarter ending on May 1, falling from the $784 million it reported in the first quarter of last year. Dell reported earnings per share of $0.15. Excluding one-time items, earnings per share was $0.24, slightly over the consensus forecast of $0.23 per share from analysts polled by Thomson Reuters.

The company reported a charge of $185 million related to restructuring expenses.

Dell's quarterly revenue fell to $12.3 billion during the first quarter, a 23 percent drop from the previous year. Revenue was short of analyst expectations of $12.6 billion.

Despite the reduced earnings, Dell tried to stress that it was taking steps to maintain profitability during the challenging economic environment. The company continues to cut costs and is looking to get deeper into sustainable markets like data centers, services and software.

"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," said Michael Dell, chairman and chief executive officer of the company.

The company said earlier this year that it plans to reduce costs by $4 billion by the end of fiscal 2011, a change from the original target of $3 billion announced in May.

Revenue for mobile products - which includes laptops - was $3.88 billion during the quarter, a drop from the $4.85 billion it reported last year. Desktop PC sales were $3.16 billion, a massive drop from the $4.87 billion reported last year. Other business units - including servers, storage, software and enhanced services - also had declines in revenue.


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