Dell second quarter profit drops by nearly a quarter

Dell corporate IT sales down nearly a third

Dell turned in another set of negative financial statistics for the second quarter, although its share price jumped seven per cent as the market viewed the results as better than expected.

Although total shipments were up 10 per cent, revenue dropped 22 per cent from $16.4bn (£10bn) a year earlier, to $12.8bn (£7.9bn), while net income dropped a similar amount (23 per cent) from $616m (£378m) to $472m (£256m).

The technology vendor saw corporate IT spending hit especially hard with sales dropping almost a third (32 per cent) to $3.3bn (£2bn) from last year, and three per cent from the last quarter.

Dell chief executive and chairman Michael Dell said the global number two PC manufacturer had reduce complexity in the organisation, and significantly lowered operating costs ready for the global economic recovery.

He said that if current demand trends continued Dell's second half of 2009 performance would be stronger than the first half.

"We are expanding our capabilities in enterprise technology and services and investing in our core business to distinguish Dell both with customers and in operating performance,” he said.

Dell's small business revenue of $2.8bn (£1.7bn), was down 29 per cent from last year, and five per cent down on the last quarter. Consumer revenue of $2.9bn (£1.8bn) was down nine per cent from last year and up two per cent sequentially, while public sector sales of $3.8bn (£2.3bn) were down 16 per cent from a year ago, but up a fifth from the last quarter.

Dell seemed wary of improvements in the third financial quarter of 2010. On the one hand he said it expected seasonal demand increases from consumer and federal government businesses, while pointing out that demand in the third quarter was generally slower from US and European large corporate customers.

The company said: "A refresh cycle in commercial accounts is more likely to occur in 2010, with IT spending improving first in the US."