SHARE
Facebook X Pinterest WhatsApp

Recession Hits Dell in Q4

Following Hewlett-Packard’s announcement last week of a tougher than expected quarter, it’s no surprise that its computer hardware rival Dell would do the same or worse when it announced fourth quarter earnings on Feb. 26. That was the case today when Dell released earnings well below analyst estimates. Dell reported Q4 net income of $351 […]

Written By
thumbnail Jessica Davis
Jessica Davis
Feb 26, 2009
Channel Insider content and product recommendations are editorially independent. We may make money when you click on links to our partners. Learn More

Following Hewlett-Packard’s announcement last week of a tougher than expected quarter, it’s no surprise that its computer hardware rival Dell would do the same or worse when it announced fourth quarter earnings on Feb. 26.

That was the case today when Dell released earnings well below analyst estimates. Dell reported Q4 net income of $351 million compared to $679 million, a 48 percent drop from the same period a year ago.  Revenues fell to $13.4 billion from nearly $16 billion, a 16 percent drop from the same period last year.  Earnings per share came in at 18 cents, far short of analysts’ projected 26 cents.

In report previewing Dell’s expected earnings, Bernstein Research noted that a rapid deterioration in technology spending over the last three months had caused the firm to lower its PC forecast for 2009 – to an actual decline of 7.3 percent from the prior forecast of 4.9 percent growth.

Dell said in its earnings announcement that it will increase its cost reduction initiative from $3 billion annually by the end of 2011 to $4 billion.

"We now have a clear view to additional opportunities and are raising our cost-reduction target to $4 billion," said Brian Gladden, Dell’s chief financial officer, in a formal statement issued by the company. 

The move encouraged Bernstein Research senior analyst Toni Sacconaghi, who said in a report issued following the earnings announcement that "We were most encouraged by Dell’s continued commitment to drive profitability over growth."

Pointing to the additional $1 billion in cost reductions, Sacconaghi says that he believes half of the incremental cost savings could come from further workforce reductions "which would imply up to 5,000 additional headcount reductions or an approximate 7 percent reduction in force."

Dell said revenue in its Americas Commercial business was $6 billion, a 17 percent decline on a 23 percent decrease in units.

EMEA commercial revenue was $3 billion for the quarter and saw a 17 percent decline and a 19 percent decline in product shipments.

Revenue in Dell’s Asia Pacific Japan commercial business came in at $1.4 billion in Q4,a 24 percent decline on a 19 percent decrease in shipments.

The global consumer business did a little better with a shipment increase of 18 percent. But revenue still declined 7 percent to $3 billion, Dell said in its formal statement.
Looking ahead Dell said that "global IT end-user demand will continue to be uncertain and challenging," but provided no forecasts for revenues.

 

Recommended for you...

Q&A: Why MSPs Need to Evolve Into Security Educators
Dell Updates PowerProtect to Boost Cyber Resilience
Jordan Smith
Sep 4, 2025
August M&A Roundup: CrowdStrike, Accenture Moves & More
Jordan Smith
Sep 4, 2025
Lyra Technology Group CEO on Scaling Local MSP Model, AI & More
Channel Insider Logo

Channel Insider combines news and technology recommendations to keep channel partners, value-added resellers, IT solution providers, MSPs, and SaaS providers informed on the changing IT landscape. These resources provide product comparisons, in-depth analysis of vendors, and interviews with subject matter experts to provide vendors with critical information for their operations.

Property of TechnologyAdvice. © 2025 TechnologyAdvice. All Rights Reserved

Advertiser Disclosure: Some of the products that appear on this site are from companies from which TechnologyAdvice receives compensation. This compensation may impact how and where products appear on this site including, for example, the order in which they appear. TechnologyAdvice does not include all companies or all types of products available in the marketplace.