Dell Inc, the world's No. 2 PC maker, narrowly beat analysts' expectations for sharply reduced profit on Thursday, even as the global downturn hit technology spending, helping its shares rise after hours.
The company gave little comfort to investors looking for signs of a quick turnaround, saying there was not enough momentum in the PC market to call a bottom yet. But it held out hope for a surge in sales next year as corporations replace their computer systems.
Dell did not give any detailed financial outlook. Last week, larger rival Hewlett-Packard Co, which also reported lower quarterly profit, forecast a 4 percent to 5 percent dip in fiscal year revenue.
Dell said net income fell to $290 million, or 15 cents a share, in the fiscal first quarter ended May 1, from $784 million, or 38 cents a share, in the year-ago period.
Excluding certain one-time restructuring costs, the company posted a profit of 24 cents a share, just beating analysts' average estimate of 23 cents a share, according to Reuters Estimates.
Revenue fell 23 percent from a year ago to $12.3 billion, versus Wall Street's estimate of $12.7 billion. Dell's global PC shipments fell nearly 17 percent in the first calendar quarter, according to data firm IDC.
Shares of Round Rock, Texas-based Dell rose 1.4 percent in extended trading after closing up 3.2 percent at $11.48 on Nasdaq.
POWERFUL CYCLE AHEAD
Dell is focusing on cutting costs in what it called a challenging environment, concentrating more on profitability than growth.
In February, Dell boosted its 2011 cost-reduction target to $4 billion from $3 billion. It cut its overall headcount by more than 9,000 jobs last fiscal year, ending with a total headcount of 78,900. It declined to give a new total for the end of the last quarter.
We don't believe there's enough momentum to call a bottom yet, Dell Chief Financial Officer Brian Gladden said on a conference call. He added that there was no real improvement in business conditions in May.
Chief Executive Michael Dell predicted a rise in PC sales next year, as corporations update their systems, taking advantage of new Intel Corp chips and Microsoft Corp's upcoming Windows 7 operating system.
We're preparing for what we believe will be a powerful replacement cycle, said Dell on the call. There's a number of other factors that could ignite a powerful refresh cycle and that's what we're playing for.
(Reporting by Bill Rigby; Editing by Richard Chang and Tim Dobbyn)