Dell profits take nose dive

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Dell profits take nose dive

Dell announced a fresh round of cuts Thursday in the aftermath of a rough fiscal quarter.

The company announced that falling demand and shrinking budgets within the IT community had dropped its profits by some 48 per cent over the same quarter.

"A lot of IT spending is being deferred until there’s better economic visibility," conceded company founder and chief executive Michael Dell.

"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."

Part of that discipline will include further cutting of costs. The company said that it would expanding its planned cuts over the next two fiscal years from US$3bn to $4bn.

Dell hopes that both the cost cuts and its recent restructuring will help the company weather the current economic storm.

Over the quarter, the company said that its enterprise business revenue in the Americas was down by some 17 per cent, while the EMEA region saw revenues drop by 17 per cent and the APJ region saw a 24 per cent drop.

The company's consumer operation struggled as well. Though unit sales were up, enough customers opted for lower-priced machines, which drove revenues down by seven per cent over the quarter.

Dell's woes reflect those of many companies in the IT sector. Last week, HP also cited falling demand in posting a 13 per cent drop in profits which included PC sales that had fallen 19 per cent and server sales which had declined by 18 per cent.

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