Dell's profit falls almost 50 percent
Updated at 1:50 p.m. PST with comments from CFO Brian Gladden.
Dell's profit sank drastically during the final quarter of 2008.
The PC maker reported fourth-quarter revenue of $13.4 billion Thursday, a 16 percent drop from $15.9 billion reported the same quarter a year ago. Dell's profit for the quarter totaled $351 million, or 18 cents per share, compared to $671 million and 31 cents per share the year before. That's nearly a 48 percent drop in profit. Analysts had been anticipating earnings per share of 26 cents.
Dell had reported last month it would be forced to take a pre-tax charge of $280 million, or 11 cents per share, related to cost-cutting and restructuring measures taken during the quarter.
The company continued to cite the "challenging" global environment and the reduction in IT spending by large corporate customers, a segment in which Dell is heavily invested.
Dell CFO Brian Gladden
(Credit: Dell )Many of the company's customers began to defer spending starting in the summer, and it "continued to deteriorate through the second half of the year," Chief Financial Officer Brian Gladden said during a conference call with reporters. "We expect continued weakness during the current quarter."
Gladden tried to keep the focus on the company's progress on cutting costs. Dell cut operating expenses by 16 percent, or $363 million, during the fourth quarter.
He also said there would be more to come. Gladden said the company will be able to take $4 billion of costs out of its budget by 2011, up from the previous goal of $3 billion announced last year. The costs will come from improving on manufacturing and supply chain costs, as well as operating expenses. When asked if that included more job cuts, Gladden didn't deny that it would. It's "not just labor, not just people," he said.
Though Dell managed to ship 18 percent more consumer PCs for the quarter, because consumers are gravitating toward cheaper notebooks and Netbooks, revenue dropped 17 percent. But the full year was actually an improvement on 2007--revenue increased 11 percent to $11.5 billion.
Dell's stock dropped 2.3 percent to $8.02 per share in after-hours trading.
Erica Ogg is a CNET News reporter who covers Apple, HP, Dell, and other PC makers, as well as the consumer electronics industry. She's also one of the hosts of CNET News' Daily Podcast. In her non-work life, she's a history geek, a loyal Dodgers fan, and a mac-and-cheese connoisseur. E-mail Erica. 
@AppleRocks1963
Get a life
@Myself
I am slightly dissapointed as they are one of the only oem that expirement with non-standard os's.
Does this mean you are calling Linux 'crappy' as well? Linux fans... and Apple fans might not take too kindly to your opinion there.
Dell made very small profits in a good economy, won't improve much in the current one. If the downward trend continues i don't see dell surviving another 2 years.
So DELL users have laptops that runs on a OS(Vista) that has 2000 bugs!!!
Wakeup DELL Users!!!
They got fat on a Homogenized Wintel alliance, this is great during boom years, not so much now.
I really wish Dell would utilize it's excellent logistical skills to build some awesome affordable Netbooks, specifically, VIA Nano based or AMD, or NVIDA Tigra, something other than the usual Atom BS. (Can your netbook do GB/s AES encryption? No then **** about Atom)
If HP can do this (read 2133,etc) Why not Dell?
It was understandably easily, given that HP already had previous business relationships with VIA (ThinClients Terminals, Laptops)
But still, this is Dell, a company that practically invented the mass market, quick and cheap PC. They need to remember this, Ubuntu Laptops are a nice start, but whats the point if it's just saving me the 20 minute install?
I want custom build options in the order process, optimized drivers, and all the other options that an operating system VAR is supposed to provide. EmperorLinux offers these services, as do many other resellers, is Dell just too big for it's own good?
So while I like Dell, if they were to go out of business I can't say I'd be all THAT sad.
Cody
compare them to Mafiasoft's 50% margins !
it's ridculous ,
it's classic example of how putting all your eggs in one basket is a bad move
Dell and other PC manufactures made Windows a Sucess {Monopoly}
by forcing it down r throats ,without giving us a choice !
and now they r suffering it's wrath !
wat goes around comes around !
I don't feel the least bit sorry for Dell or HP's Pc buisness !
they deserve wat they r getting !
Sales* 61.98 Bil
Income* 17.23 Bil
Sales Growth* +18.20%
Income Growth* -11.30%
Net Profit Margin 27.80%
Debt/Equity Ratio 0.06
Now dont you feel ridiculous.
do a wiki search
their income is no where near 17 bln
it's somewhere in the 3-4 bln range
that makes their margins a ridiculously low 5%
so who's the one who looks ridiculous ow ?
- by Inconnux February 28, 2009 11:37 PM PST
- crashpad,
- Like this Reply to this comment
-
(27 Comments)what you don't realize is that PC manufactures have come out and said that one of the main reasons that PC sales have been dropping off is BECAUSE of Vista. There is still a huge demand for this "dead horse" (XP) and if consumers are given a choice they will chose XP en mass. You can call it devotion all you want, I'm not a huge fan of XP, but it is FAR better than Microsoft's other alternative. I will NOT buy Vista because of my overwhelmingly negative experience with it.
As far as XP being old, it is based off the NT kernel. OSX is based of BSD Unix which is FAR older. There is nothing wrong with the NT kernel. It is somewhat stable. People don't want Vista, businesses are 'downgrading' to XP in huge numbers. The market has spoken and Vista is a failure, the PC manufacturers need to pressure Microsoft before they go under.