MANHASSET, N.Y. PC supplier Dell posted sales of $14.1 billion for the second quarter of fiscal year 2007 ended Aug. 4, up 5 percent year-over-year. Net earnings were $502 million or 22 cents per share, which fell short of the company's earlier guidance as a slow market forced aggressive pricing.
"While we are disappointed with the results for the quarter, we are taking the necessary actions to correct missteps and improve our results for the long term," said Kevin Rollins, Dell chief executive, in a statement. "Key actions include accelerating cost initiatives, increasing investments in service and support, and better pricing management."
The proposed actions, however, did not appear to impress analysts during a conference call, some of whom questioned why the company did not have more specific cost initiatives.
Dell (Round Rock, Texas) also downplayed a recent recall involving 4.1 million lithium-ion batteries branded by Dell and manufactured by Sony. Company executives stated the number of defective batteries is likely to be an extremely tiny portion of the millions of batteries being recalled.
For the second fiscal 2007 quarter, Dell reported a industry-leading global market share of 19.3 percent, with unit sales up 6 percent sequentially. International sales rose 11 percent, led by the Asia-Pacific and Japan region. Dell also reported robust growth in the emerging markets of China, Brazil and India.
However, rival PC maker Hewlett-Packard Inc., which reported a strong quarter
Wednesday, may be closing in
on Dell, according to several market research reports.
Cash flow from operations was almost $700 million and Dell ended the quarter with $10.8 billion in cash and investments. Dell spent $1.0 billion in the quarter to repurchase 43 million shares of common stock.
In an unrelated development, Dell said it would extend its relationship with processor supplier AMD Inc. (Sunnyvale, Calif.), first announced last quarter
. Dell will launch Dimension desktop computers with AMD processors next month and introduce a two-socket and multi-processor server using AMD's Opteron
processors by the end of the year.