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Dell reports strong first-quarter earnings

Dell reports strong first-quarter earnings

Dell reports strong earnings for the first quarter of 2009, driven by strong laptop sales.

Dell on Thursday reported strong earnings for the first fiscal quarter of 2009, with laptop revenue growth offsetting a drop in desktop revenue.

Dell's net revenue was US$16.08 billion for the quarter, growing 9 percent year-over-year and beating expectations of $15.7 billion based on analysts polled by Thomson Financial.

The company reported net income of $784 million, a 4 percent year-over-year increase that beat analyst estimates of $696.2 million. The earnings included a $106 million charge related to severance costs and facility closures.

Revenue in the mobility group, which includes laptop sales, totaled $4.9 billion, a 22 percent year-over-year increase. Laptop shipments grew 43 percent during the quarter, the company said. Desktop revenue fell 5 percent year-over-year to $4.7 billion.

Dell reduced its employee headcount by 7,000 in the past year, including about 3,700 employees in the first quarter, the company said. It also added about 2,700 employees through acquisitions. The company cut its headcount by 3,200 by the end of fiscal 2008, which ended on Feb. 28.

The company last year announced plans to reduce its headcount by 8,800, but during the quarter CEO Michael Dell said the layoffs may exceed that number in an effort to further cut costs. The company wants to save $3 billion over the next three years.

Dell is also realigning its manufacturing strategy by shutting down some factories, while opening new operations in emerging markets.

Meanwhile, the company has opened factories in low-cost manufacturing countries like Poland, Brazil and India to meet the growing needs in emerging markets. Dell is willing to shift computer assembly to partners to reduce costs and boost margins.


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