Dell first-quarter earnings crash 63 percent

Giant hit hard by recession spending cuts.

Earnings at hardware giant Dell have plunged by 63 per cent as businesses and consumers continue to cut back on purchases.

Dell’s first-quarter net income fell to $290m from $784m in the same period last year. Revenue was down 23 per cent to $12.34bn for the period ended 1 May from $16.08bn in 2008.

“We’re continuing to transform the company on the cost side and delivering strong cash flow,” said chairman and chief executive Michael Dell. “Re-establishing cost leadership and having flexibility to invest in our business will position us well as IT spending improves.

“Signals about the demand environment are mixed, but we’re preparing for what we believe will be a powerful replacement cycle, with virtualisation and managed services playing larger roles in what customers want and Dell provides.”

Dell said operating costs had been cut by $101m from the previous quarter and $312m from last year’s first quarter.

The company was hit especially hard by a slowdown in business purchases: revenues from the large enterprise division were down 31 per cent and the SME division saw a drop of 30 per cent.

By contrast, the company saw only a 16 per cent fall in consumer revenue and an 11 per cent drop for public sector revenues.