By Poornima Gupta
SAN FRANCISCO Nov 15 Dell Inc's profit
slid 47 percent, hurt by lower PC sales and weaker demand from
large corporations, but the No. 3 personal computer maker said
it expects revenue to grow as much as 5 percent in the current
Dell shares fell 2.3 percent in after-hours trade. The
company, once the world's top PC maker and a pioneer in computer
supply chain management, is struggling to defend its market
share against Asian rivals like Lenovo. It is trying
to bolster growth by focusing on products and services to
The company founded by Chief Executive Michael Dell warned
that it "sees the challenging global macro-economic environment
continuing in the fourth quarter."
Dell said revenue in its fiscal third quarter fell 11
percent to $13.7 billion, slightly lower than the average
analyst estimate of $13.89 billion according to Thomson Reuters
It posted net income of $475 million or 27 cents a share in
the fiscal third quarter, compared with $893 million or 49 cents
a year earlier. Excluding certain items, it earned 39 cents a
share, compared to an average forecast for 40 cents.
Chief Financial Officer Brian Gladden said in an interview
that corporate customers continue to defer technology spending.
"It's not clear what's going to cause them to increase their
spending in the short term, given the uncertainty in the
economy," he said.
Dell's enterprise solutions revenue rose 3 percent to $4.8
billion, while server and networking revenue climbed 11 percent.
In contrast, consumer revenue plummeted 23 percent to $2.5
billion, underscoring the plight of the broader PC market, and
sales to large corporation declined 8 percent to $4.2 billion in
The consumer market is improving with the launch of the
Windows 8 software from Microsoft, which has been designed with
touchscreen devices and Internet-based computing in mind,
PLANNING FOR FISCAL CLIFF
Part of the spending weakness among corporate customers is
because of the looming fiscal cliff, Gladden said.
The fiscal cliff involves $600 billion in automatic tax
hikes and spending cuts effective at the end of the year if U.S.
lawmakers fail to agree on reducing the budget deficit.
The cuts could take a toll on consumer and government
spending and cause the economy to stall.
"I would tell you that the behavior we are seeing from our
customers today is actually driven by that uncertainty," Gladden
said. "It's not like it's all going to happen overnight. It's
affecting our business today."
Dell is ensuring that it has access to cash in case there is
no congressional action.
"I would say there are several things we are doing from a
planning standpoint, especially on the treasury side to ensure
that we are in a position to have appropriate access to
liquidity," Gladden said, adding that Dell is making sure it has
access to lines of credit and commercial paper.
Dell shares fell 2.3 percent to $9.36 in after-market trade
from its close of $9.56. The shares initially rose following the
release of the results.