Dell said its revenue declined 16 percent year-over-year to $13.4 billion in its last business quarter, which ended Jan. 30. The company also reported its quarterly net income fell 48 percent to $351 million when factoring in previously announced pretax expenses of $277 million.
To counter what is proving an increasingly “uncertain and challenging IT market,” Dell executives told investors on Thursday that the company will implement an additional $1 billion in cost cuts within the next 24 months.
“The cost actions we took this past year made us more competitive and delivered value to customers in a challenging economic environment,” said CFO Brian Gladden. “We now have a clear view to additional opportunities, and are raising our cost-reduction target to $4 billion” from $3 billion.
The Biggest Challenge
Dell’s operating-expense cutbacks are being driven by industry-wide PC sales declines both at home and abroad. In the fourth quarter of 2008, the worldwide PC industry suffered its worst growth rate since 2002, noted Mika Kitagawa, a principal analyst at Gartner. “The fourth quarter started out with a relatively optimistic view, but then it got worse every month,” Kitagawa said.
One bright spot for Dell was the Asia-Pacific region, where sales grew 16.3 percent compared to a year ago, even as the overall Asia-Pacific market declined 2.4 percent, Kitagawa said. In particular, the PC maker enjoyed “strong growth in China, where Dell expanded channel business, reaching new markets through channel partners.”
To address Dell’s falling sales in the U.S., Europe and elsewhere, the company must confront its biggest challenge: Find ways to boost enterprise technology sales. “We saw deteriorating demand for IT spending in the second half of the year — the deferring of IT spend[ing],” Gladden said. “The CIOs around the world really do need our IT, and the challenge is that they are…