Dell today reported its fourth quarter revenue of $13.4 billion, a drop of 16 percent from $15.9 million in Q4 2007. Dell’s profits were down 48 percent from $671 million to $351 million when compared to same quarter a year ago. Earnings per share were 18 cents down from 31 cents per share the year before. The revenue was down even though Dell shipped 18 percent more consumer PCs during the quarter.
Dell blamed the challenging global economic environment and the reduction in IT spending by large corporate customers as the reason behind the significant drop in both profit and revenue in Q4 2008. Dell expects continued weakness during Q1 2009.
Dell’s CFO Brain Gladden tried to focus on the company’s progress on cutting costs. He said that Dell will be able to take $4 billion of costs out of its budget by 2011 by improving on manufacturing and supply chain costs, as well as operating expenses.
Dell should have started taking the cost cutting measures few years back. If your company is making just $351 million profit on revenue of 13.4 billion (which is just 2.6% of revenue) there is seriously something wrong.