DELL 2009 Q1 Earnings

In a report released after the closing bell on May 28, the world’s second largest PC maker, Dell Inc. (DELL) confirmed that the company’s profits for the 1Q plummeted due to the continued global recession that pushed sales lower around the world.

Together with Hewlett-Packard, Dell has witnessed the global computer market continue to weaken since last year, including the worst holiday shopping season for computers in more than six years.

For the company’s recent quarter, Dell posted a profit of $290M, or $0.15 per share, in sharp contrast to the previous year’s earnings of $784M, or $0.38 per share, a decrease in net income of more than 63%. Results include a $0.09 charge related to facility closings and severance packages.

Excluding recent one-time charges, Dell would have posted net income of $0.24 per share, slightly above analysts’ expectations.

Meanwhile, Dell’s quarterly sales retreated as well, falling from $16.08B to $12.34B, a decrease in revenues of more than 23%. Within the numbers, Dell’s sales of laptops and netbooks, the company’s largest combined product category, slipped more than 20% during the period, as consumers continue to curtail their spending, which in turn, pushed the company’s selling prices lower by nearly 8%.

On average, analysts within in the industry were looking for the personal computer maker to post quarterly earnings of $0.23 per share on total sales of $12.6B.

“Fiscal first-quarter results are consistent with how the company is managing its business in the present IT spending environment,” announced CFO Brian Gladden. "We would hope that we would see improved demand in the later part of the year," Gladden added, "hopefully sooner versus later."

Delving deeper into the report, Dell’s large enterprise sales plunged 31% to $3.4B as many larger corporations curtailed their IT spending. Meanwhile, public revenues, those coming from the government, slipped 11% to $3.2B.

Overall desktop PC sales fell 34% during the quarter to $3.2B, as sales to smaller and medium sized businesses plunged more than 30% to $3B. Additionally, consumer revenues slipped 16% during the quarter to total $2.8B.

As for the company’s software and peripheral sales, Dell witnessed revenues drop more than 18% year-over-year to total $2.2B, along with server and networking sales plummeting 25% during the period to $1.3B.

In order to offset some of the dissipating revenues generated from sales, Dell reduced their operating expenses by nearly 15% from a year ago to $1.8B. The company is looking to reduce their cost structure by more than $4B this year. Efforts to shift from company-owned factories to contracted manufacturers will help reduce costs, along with additional job cuts. Actual numbers of those let go were not released and the company denied withheld numbers of how many could be laid-off in the coming months.

During the past year, shares of DELL have lost more than 48% of their market value, during which time, the company’s main competitor Hewlett-Packard has only lost 26% of their value. In the last 52 weeks, Dell has seen their stock trade as low as $7.84 and as high as $26.04 per share.

On the final trading day of May, shares of DELL were trading in the green by the sound of the closing bell. At the conclusion of trading, the company’s stock was up $0.13, or 1.1%, to end the month at $11.61 per share.

By BetterTrades