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Dell's profits slide 47 per cent

by on16 November 2012

Weaker demand from big corporates

Hardware outfit Dell's third-quarter profit slid 47 percent, thanks to low PC sales and weaker demand from large corporations. Dell's consumer PC business is struggling as the company's corporate customers continue to defer spending due to the uncertain state of the economy. To make matters worse, Dell thinks that the fourth quarter will be just as challenging.

The company is having a devil of a job defending its market share against Asian rivals like Lenovo. It is trying to bolster growth by focusing on products and services to corporations, who are not buying either. However the company said it expects revenue to grow as much as 5 percent in the current quarter.

"Our outlook for the quarter would be generally consistent with what we typically see in terms of a seasonal pickup," it said.

Dell said revenue in its fiscal third quarter fell 11 percent to $13.7 billion, slightly lower than the average analyst estimate of $13.89 billion. It posted net income of $475 million compared with $893 million or 49 cents a year earlier. Dell shares dropped 1.8 percent in after hours trading.

Chief Financial Officer Brian Gladden said in an interview that corporate customers continue to defer technology spending.

"It's not clear what's going to cause them to increase their spending in the short term, given the uncertainty in the economy," he said.

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