Computer giant Dell has reported a handsome increase in revenue in the fourth quarter but at the same time it could not make it reflect on the bottom line and reported a 5% drop in profits.
The Texas-based company’s net income dropped to $334 million, or 17 cents per share, on revenue of $14.9 billion for the quarter, which ended Jan. 31. The net income compared with $351 million, or 18 cents per share a year ago. Revenue was up 11 percent from the same quarter a year earlier.
The company, however, outperformed Wall Street’s expectations as it reported good sales across all its segments.
The PC-maker’s shares fell 5.9 percent, to $13.58, in extended trading after the report.
Dell executives acknowledged that the demand was good but pointed out that some parts, including memory chips, were in short supply. “It is fair to say that we saw better demand than we expected in the quarter,” Dell’s chief financial officer, Brian Gladden, told analysts. “It is fair to say we were chasing parts”.
The company made a $9 million operating profit on $3.5 billion in quarterly sales for its consumer segment.
For the year, Dell had a profit of $2.1 billion, or $1.05 a share, on revenue of $52.9 billion. Revenue was down by 13 percent from the year before; profit was down by 42 percent.
Dell said its fourth-quarter services revenue grew by more than 50 percent in the public sector because of its acquisition of Plano-based Perot Systems Corp. Without the charge, Dell said it earned 28 cents per share.
Gladden said Dell has met many of its cost-cutting objectives but would continue to look for cost-cutting opportunities.
Dell chairman and CEO Michael Dell said he expected to see an increase in commercial sales in the next couple of years as businesses upgrade to Windows 7.
The disappointing margin reflected Dell’s dependence on the computer hardware market.
Larger rival Hewlett-Packard Co, which posted stronger results on Wednesday, had benefited from a more diversified revenue base than Dell, with income from software and services as well as hardware.
Dell is heavily dependent on selling PCs to U.S. businesses.
Meanwhile, Dell is pushing into higher-margin businesses such as services and mobile devices as it looks to boost overall margins.
Laptop revenue rose 16 percent from a year ago, while revenue from servers and networking climbed 26 percent.