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The Lights Flicker at Dell
Dell’s earnings were down 48% to $351 million, 18 cents a share, on revenues down 16% to $13.4 billion

Dell’s earnings were down 48% to $351 million, 18 cents a share, on revenues down 16% to $13.4 billion and units down 12% in the January quarter, three of the single worst months since PCs were invented. Dell’s gross margin dropped from 18.7% to 17.2%.

Needless to say it did not meet expectations. Wall Street, which oughta get out of the house once in a while, has yet to bring any of its expectations in line with reality; the consensus on Dell was for 26 cents on $14.2 billion.

HP’s earnings came in 13% short last week.

Dell said it’s raising the $3 billion cost cutback target that it established last March to $4 billion by FY ’11 because deferred spending has increased and spread worldwide.

It offered no guidance going forward and only said that it believes global end-user demand will continue to be “uncertain and challenging.”

It added little color about where it’s going to get that added billion-dollar cost savings – only that it had various scenarios ranging from better to worse depending on the demand environment and that it’s thinking both cost of goods sold and OPEX as well as G&A. It has hopes for Windows 7 and is evidently casting its eye over non-hardware revenue sources.

Stanford Bernstein analyst Toni Sacconaghi, who took his sales estimates down to $13.3 billion before Dell posted its results, suggested during the conference call that it would have to cut another 12%-15% of its workforce, but Dell CEO Michael Dell and CFO Brian Gladden wouldn’t address that projection. Dell is supposed to have cut 9,400 jobs, down 11% year-over-year.

Dell said its Americas commercial business dropped 17% to $6 billion on a 23% drop in units. The results pushed its 12-month revenues down 5% to $28.6 billion.

EMEA commercial was down the same 17% to $3 billion with shipments down 19%. Full-year revenues were flat at $13.6 billion.

Asia-Pacific commercial business dropped 24% to $1.4 billion, with units down 19%.

Dell’s revenue from the BRIC countries was down 17% on a 19% drop in shipments. China revenues dropped, India represented single-digit growth. BRIC now represents upwards of 7% of its total revenues.

The commercial sector now represents 81% of Dell’s revenue and 96% of its operating income.

Dell’s global consumer revenues were down 7% to $3 billion although shipments increased 18%; consumers are buying lower-priced notebooks and desktops. Full-year revenues were up 11% to $11.5 billion; Dell can thank its lucky stars it started getting into retail channels.

Revenue from desktop PCs dropped 27%, notebooks dropped 17%. Server revenue was down 16% on an 18% drop in units. Storage revenue was up 7%. Services revenue was down 3% to $1.4 billion with deferred revenues up 7% to $5.6 billion. Software and peripheral were down 6%, despite double-digit growth in software sales.

Dell has ~$9.5 billion in cash and investments.

About Maureen O'Gara
Maureen O'Gara the most read technology reporter for the past 20 years, is the Cloud Computing and Virtualization News Desk editor of SYS-CON Media. She is the publisher of famous "Billygrams" and the editor-in-chief of "Client/Server News" for more than a decade. One of the most respected technology reporters in the business, Maureen can be reached by email at maureen(at)sys-con.com or paperboy(at)g2news.com, and by phone at 516 759-7025. Twitter: @MaureenOGara

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