Dell records 48 per cent drop in net profit

Dell announced it is increasing its cost-cutting goal to US$4 billion by the end of fiscal 2011 as it tries to come to terms with the recession.

The company recorded net income of $351 million for the fourth quarter ended Jan. 30, a 48 per cent drop from the $679 million it recorded in last year’s fourth quarter. Net income per share was $0.18. Analysts polled by Thomson Reuters expected net income of $496 million.

Revenue fell to $13.4 billion, a 16 per cent drop from a year ago, and short of analyst estimates of $14.2 billion.

Reduced IT spending has taken its toll on the company, with spending deferred until the economy improves, CEO Michael Dell said in a statement. However, the company is taking other steps to reduce costs to adapt to the recession.

The company now aims to reduce costs by $4 billion by the end of fiscal 2011, a change from the original target of $3 billion announced in May.

The steps Dell has taken in the past to cut costs include compensation reduction, staff cuts, restructuring its product design and distribution, and realigning its manufacturing strategy by shutting down factories.

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Jim Love, Chief Content Officer, IT World Canada

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Agam Shah
Agam Shah
Agam Shah is a reporter for the IDG News Service in New York. He covers hardware including PCs, servers, tablets, chips, semiconductors, consumer electronics and peripherals.

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