Dell Records 48 Percent Drop in Net Income

Dell's net income dropped 48 percent for the fourth quarter, the company said Thursday, as it also announced it is increasing its cost-cutting goal to US$4 billion by the end of fiscal 2011 as it tries to come to terms with the recession.

The company recorded net income of $351 million for the fourth quarter ended Jan. 30, a 48 percent drop from the $679 million it recorded in last year's fourth quarter. Net income per share was $0.18. Analysts polled by Thomson Reuters expected net income of $496 million.

Revenue fell to $13.4 billion, a 16 percent drop from a year ago, and short of analyst estimates of $14.2 billion.

Reduced IT spending has taken its toll on the company, with spending deferred until the economy improves, CEO Michael Dell said in a statement. However, the company is taking other steps to reduce costs to adapt to the recession.

The company now aims to reduce costs by $4 billion by the end of fiscal 2011, a change from the original target of $3 billion announced in May.

The steps Dell has taken in the past to cut costs include compensation reduction, staff cuts, restructuring its product design and distribution, and realigning its manufacturing strategy by shutting down factories.

"Within our business, we're being very disciplined in managing costs, generating profitability and cash flow, and investing in ways that separate Dell from others today and when the economy inevitably improves," Dell said.

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