Dell: Costs Come Down, But So Does Demand

As I noted earlier, Dell ’s results for the fiscal third quarter ended October 31 included weaker-than-expected results at the top line, but better than expected profits, thanks to significant cost cutting and improving gross margins. Here are a few key tidbits from the company’s conference call and closer perusal of the numbers: Gross margin of 18.8% was up from 18.5% a year ago, and 17.2% in FY Q2. Operating margin of 6.7% was up from 5.3% a year ago, and 5% in Q2. SG&A of 11% was down from 12.1% a year ago, and 11.2% in Q2. Cash flow from operations in the quarter was negative $86 million. The company bought back 21 million shares in the quarter for about $400 million. Dell has $8.9 billion in cash and investments. The company’s commercial business accounted for 96% of profits and 82% of revenue on a trailing 12 months basis. The commercial business saw revenue drop 6% year over year, on a 5% drop in units. Americas commercial was down 8% in revenue, and ... (link)