Dell profits slide 5 percent

Updated at 1:37 p.m. PT with comments from earnings call.

Dell on Thursday reported third-quarter profit of $727 million, or 37 cents per share, and revenue of $15.16 billion.

Profits were down 5 percent from the same quarter a year ago, though earnings per share improved 9 percent. Revenue was down 3 percent.

"We expect the short term to stay challenging," says Dell CFO Brian Gladden.

(Credit: Dell)

Most analysts had been anticipating earnings of 32 cents per share and $16.3 billion in sales.

A year ago, Dell earned $766 million, or 34 cents per share, on $15.65 billion in sales.

Chief Financial Officer Brian Gladden said on a call with reporters Thursday that the company is "pleased" with its performance during the quarter, "especially against the backdrop of the global economic environment."

Looking to the future, Gladden said Dell continues to see a slowing in demand "almost all" of its businesses. "We expect the short term to stay challenging," he said, but refused to provide any additional commentary on what Dell expects for the fourth quarter or for next year.

He did say that the company would make plans on the expectation of tightening IT budgets in the next year.

Some bright spots for Dell included its global consumer business, which saw a 10 percent improvement in profits and shipments that rose by one-third.

Dell was also able to reduce its costs further than expected. The company previously said it had met its goal of reducing employee headcount by 8,900--Gladden said Dell actually cut 10,800 positions.

The company said delaying or canceling any planned products was not part of its cost-cutting measures. Earlier there had been reports Dell had delayed the debut of a music player product until after the holiday season.

Regarding Netbooks, Gladden described the product category as a "complementary" business, and said that market response for its new Inspiron Mini products as been positive. So far, he said, Netbooks haven't affected the demand for any of its other products.

On a separate call later Thursday with investors, chief executive Michael Dell said that including 3G capability in its Netbooks has been well-received and that the company is working on signing up more wireless carriers to carry the Mini Inspiron. So far the company has partnered with European carrier Vodafone.

Dell has been battling to get its costs under control as part of a broad turnaround plan. The company will continue to look at ways to get the costs of its products down, including reviewing its supply chain and manufacturing process.

Dell shares rose 5 percent to $10.30 in after-hours trading.