Dell profit slides 47% amid weak PC market

IDG News Service - Dell on Thursday reported a sharp drop in revenue and profits for the third quarter as the weak PC market continued to weigh on its results.

Dell's revenue for the quarter, ended Nov. 2, was $13.7 billion, down 11% from a year earlier and shy of the $13.9 billion financial analysts had been expecting, according to a poll by Thompson Reuters.

Net income was $475 million, or $0.27 per share, down from $893 million, or $0.49 per share, a year earlier, Dell said.

The Texas company still gets roughly half its revenue from PCs, so declines in that market hurt the company. Worldwide PC shipments declined 8% in the third quarter, as a result of a weak economy and a move toward smartphones and tablets for more computing tasks, Gartner said last month.

The slowdown has also hit Intel, which last month also reported a drop in revenue and profit for its third quarter.

Dell is trying to boost its profits by selling more high-end PCs, rather than cheaper models. But a recent report from IHS iSuppli said consumers are favoring low-end systems, and that high-performance PCs will account for only 6% of the market this year.

Dell's revenue from desktop PCs declined 8% in the period just ended, to $3.1 billion, while sales of "mobility products" -- including laptops -- fell 26% to $3.5 billion, the company said.

Sales of storage equipment, services and software also declined. A bright spot was Dell's server and networking business, where combined sales were up 11%, CFO Brian Gladden said in a statement.

"We're also encouraged by early interest in our new Windows 8 touch portfolio and the opportunities it creates for our commercial and consumer businesses," he said.

Before the results came out, Dell's shares closed at $9.58 Thursday, level with the previous day's close. That was down from a 52-week high of $18.36 per share earlier in the year.

James Niccolai covers data centers and general technology news for IDG News Service. Follow James on Twitter at @jniccolai. James's e-mail address is james_niccolai@idg.com