Dell's profit drops 63 percent, but beats estimates by a penny
Profit fell because personal computer sales have been declining for the Round Rock, Texas-based PC maker.
Sales dropped 23 percent, missing analyst estimates, to $12.3 billion. Shares of Dell, higher by 12 percent this year, were up slightly in after hours trading.
"We're continuing to transform the company on the cost side and delivering strong cash flow," CEO Michael Dell said in a press release Thursday. Dell ended the quarter with $10.7 billion in cash and investments. The PC-maker is cutting jobs and moving manufacturing to save $4 billion in costs in the next two years.
The Dell chief said the company is "re-establishing cost leadership" to position the company for the time when "spending improves." The company said demand remains "mixed" and the "broader environment is still challenging."
"They were light on revenue compared to our expectations, and it appears pricing continues to pressure them," Shannon Cross, an analyst at Cross Research, told Bloomberg News. She has a hold rating on Dell.
First-quarter net income fell to $290 million, or 15 cents a share, from $784 million, or 38 cents, a year earlier. Excluding some costs, profit was 24 cents a share, a penny better than the 23 cents predicted by analysts. Sales missed the $12.7 billion expected by a consensus of analysts polled in a Thomson Reuters survey.
Desktop PC sales fell 34 percent to $3.16 billion in the quarter, which ended May 1, while laptop sales fell 20 percent to $3.88 billion.
"We're not comfortable talking about seeing a bottom at this point." CFO Brian Gladden said on a call with reporters. His comments are similar to what Hewlett-Packard (HPQ) said last week.
Anthony Massucci is a senior writer for DailyFinance. You may follow him on Twitter at hianthony.