Dell Sees Higher Revenue but Lower Margins

Jul.13.09 | About: Dell Inc. (DELL)

Dell (NASDAQ:DELL) says it expects revenue for its fiscal second quarter ending July 31 to be up slightly from the $12.3 billion reported in fiscal Q1. That is consistent with the Street consensus of $12.55 billion. Dell also said it expects gross margin to show a “modest decline” from the Q1 level of 21.2%, due to “higher component costs, a competitive pricing environment and an unfavorable mix of product and business-segment demand.”

The company said that “while demand for Dell’s products and services seems to have stabilized, it varies significantly by customer segment and geography.”

CFO Brian Gladden added in a statement that the company remains focused on optimizing liquidity, profitability and growth, and is on course to cut annual costs by more than $4 billion by the end of FY 2011.

Gladden said Dell is targeting long-term sales growth of 5%-7%, with operating income at or above 7% of revenue, and cash flow from operations exceeding net income.

Dell will meet with the Street tomorrow in Austin.

In late trading, DELL is down 35 cents, or 2.7%, to $12.67.

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